The economic news coming out of Japan continues to be disappointing. Reuters reports:
Japanese consumer confidence fell to a 4-1/2-year low in December as sharp sell-offs in Tokyo stocks and rising energy and grocery prices cut into householders' pockets...
The Cabinet Office survey's sentiment index for general households, which includes views on incomes and jobs, was 38.9 in December, the lowest since 36.0 in June 2003...
A Cabinet Office official said consumers' worries about prices going up in light of rising costs of raw materials such as oil was the main reason behind the sharp drop in sentiment.
The government appears to remain relatively optimistic though.
In a monthly report issued on Friday, the government stuck to its view that the economy is recovering despite some weakness but said a watch needs to be kept on how growing downside risks to U.S. growth could affect the Japanese and global economies...
Japanese wage earners' total cash earnings rose 0.1 percent in November from a year earlier, revised government data showed on Friday. The slight rise in November came after a 0.1 percent drop in October...
Separate government data showed on Friday that Japan's tertiary sector index of service industry activity rose just 0.1 percent in November from the previous month.
But if you are looking for consumer strength, it is usually better to look to the US. Yesterday's economic report from Bloomberg provided no exception.
Confidence among U.S. consumers rose in January as gasoline prices fell...
The Reuters/University of Michigan preliminary index of consumer sentiment climbed to 80.5, from December's 75.5 reading that was the lowest since 2005...
That's despite continuing deterioration in the US economic outlook.
... [T]he Conference Board reported its index of leading economic indicators dropped 0.2 percent in December, the third consecutive drop...
Over the last six months, the leading indicators index dropped at an annual pace of 1.6 percent, short of the approximate 4 percent to 4.5 percent drop Conference Board economists say signals recession.
But the economy is likely to be hit by further stress in the financial sector. From Bloomberg yesterday:
MBIA Inc. and Ambac Financial Group Inc., the two biggest bond insurers, have a more than 70 percent chance of going bankrupt, credit-default swaps show.
Prices for contracts that pay investors if Armonk, New York- based MBIA can't meet its debt obligations imply a 71 percent chance the company will default in the next five years, according to a JPMorgan Chase & Co. valuation model. Contracts on New York- based Ambac imply 72 percent odds.
Ambac shares have plunged 71 percent the past three days as the company scrapped plans to raise equity capital and Moody's Investors Service and Standard & Poor's put the insurer on review for a downgrade. Fitch Ratings cut Ambac's AAA guaranty rating today. MBIA has dropped 47 percent since Jan. 15. Credit-default swaps on the companies, which rise as confidence erodes, are trading at record highs.
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