Japan appears to be moving toward new measures - BBH

Research Team at BBH, notes that the Japan appears to be moving toward new measures as traditional LDP policy is loose monetary policy, fiscal stimulus, and a weaker yen.  

Key Quotes

“Abenomics was that but on steroids.  Abe appears to want to go to the well again and has been encouraged to do so by recent visits by Bernanke, Stiglitz, and Krugman.  

Abe does not need a super-majority to implement his economic program.  Given the low levels of public support for Abenomics, it is a stretch to claim that the weekend election was an economic mandate.  The super-majority is needed for constitutional changes.  These are divisive issues, even within the ruling coalition.  

The dollar has extended its gains against the yen.  The greenback is at its highest level against the yen since June 24, poking through the JPY103.60 area.  We recognized a break of JPY101.50 could propel a move to JPY103.  The JPY103 area should offer initial support.  There is much talk today about sterling-yen crosses being unwound by levered participants.  Sterling had been the weakest of the majors, and the yen the strongest.    

The yen's pullback coincides with a strong two-day advance in Japanese equities.  The Nikkei tacked on another 2.5% to yesterday’s nearly 4% gain.  It is the strongest two-day advance in five months.  Helped by a new record high in US stocks and better than expected Alcoa earnings after the close, MSCI's Asia-Pacific Index rose 1.2%.  All the markets in the region advanced, with Japan and China the leaders.”