March Update - US Looking Good, Japan Less Good and China Looking Bad

by Michael J. Howell12. March 2014 20:05
US Liquidity remains sky high on our indexes, which will underpin a strong economy this year. In contrast, China shows no signs of monetary easing (PBoC index 40.0) and the familiar further sight of weak overall Chinese liquidity (index 24.5) and weak cross-border capital flows to EM will add more downward pressure to Asian markets. However, what is lately a new sign is the sharp fall in Japanese private sector liquidity. We first noted this a month or two ago, but suggested then that it might be the benign accompaniment to domestic economic pick-up to the extent that it was reflecting a diversion of funds from the financial to the real economy. However, the recent appearance of poor monthly economic data may tell us that something else is underway, and perhaps the economic fall-out from a weak China is spreading? See latest Global Liquidity Update Report.

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