U.S. economic news buffers Japan market plunge

Positive retail sales and unemployment numbers stem the overnight rout -- for now.

By Jim J. Jubak Jun 13, 2013 6:13PM
Image: Arrow Down (© ImageSource/PictureQuest)So far, better than expected economic numbers from the United States have been enough to stem the overnight rout that started in Asian markets.

Nothing better exemplifies this “finger in the dike role” than the difference between the overnight close for the Nikkei 225 Index ($JP:N225) in Tokyo—a loss of 6.35%--and the gains on the ADRs of Japanese stocks trading in New York on Thursday.

Overnight Toyota Motor (TM) was down 4.61%; in New York the ADRs were up 0.59% as of noon New York time. Mitsubishi UFJ Financial (MTU) fell 4.47% in Tokyo but was up 1.06% in New York. Sumitomo Mitsui Financial (SMFG) fell 3.96% in Tokyo but climbed 1.29% in New York. Toyota Motor and Mitsubishi UFJ are both members of my Jubak’s Picks portfolio.

The good news from the U.S. economy came in the form of better than expected retail sales for May and better than expected initial claims for unemployment for the week ended June 8.

Retail sales climbed 0.6% in May. That was an improvement on the 0.1% growth in April and ahead of the 0.4% gain projected by economists surveyed by Bloomberg. Initial claims for unemployment dipped to 334,00 for the week that ended on June 8 from 346,000 the prior week. Economists surveyed by Briefing.com had expected 345,000.

Neither set of numbers was especially strong. Almost all of the upside for retail sales came from a 1.8% jump in auto sales that isn’t likely to be repeatable. The initial claims number continues a pattern of hovering on either side of the 350,000 mark that’s compatible with monthly job gains of 175,000 to 200,000.

But coming as these numbers did, after markets had been spooked by a World Bank report that cut the forecast for global economic growth in 2013 to 2.2% from the previous 2.4%, the U.S. good news was good enough to stem the rout.

There is nothing in this data, however, to produce a longer-lasting recovery in global stocks, bonds and currencies. I think that will have to wait until after the Federal Reserve meets next Wednesday and, in all probability, takes no action on tapering or anything else. In its current mood the financial markets could well regard that as a disappointment. I think we’re still looking for markets, especially emerging markets, and the market for the dollar to find a bottom.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did own shares of Mitsubishi UFJ Financial and Toyota Motor as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio.

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Jun 13, 2013 9:00PM
And you believed that hokum, Jim? No jobs, no economy, just Kool Aid. Be afraid...Wall Street is very afraid.
Jun 13, 2013 9:03PM
You consider very carefully about how much it costs to bribe away a market crash... $300 billion maybe more? The public gets told that "QE" is $85 billion a month but today alone was WAY more than that.
Jun 14, 2013 7:53AM

What ONE quadrillion dollars looks like: $1,000,000,000,000,000. The total amount of currencies (both paper and electronic), plus derivatives (phony formulation that priorotizes ahead of shareholder rights in redemption situations) and debt contracts (flim flam scam paper like the recent $1.875 billion sharked to JCPenney instead of letting it go under)... are MORE than $1 quadrillion now. When do we call our Central Banks and Financial Sectors BUST and reconcile to save our world from Armageddon over wealth control and power?

Jun 14, 2013 8:38AM
Holly crap VL let someone else get a word in LOL.
Jun 20, 2013 10:16AM

V_L, why last Oct. it had exceeded from 85 to 165 BILLION just for the month!


Been tricky since to find the actual number as the mask has been a good one!


Then the old job market news like there is improvement? Simple places and as of late,'Daily Job Cuts' site is back on a roll with the BIG NUMBERS starting to come in (as explained) where we were tossed from for speaking of such.


Just as FUNNY is the rigging of the old metals and the warehouse supply depleteing,depleting,depleting. Why covering contracts in the physical has fallen more than behind,May is stil not settled and now punded with June as well. Looks like old jp has more than their hands full of nothing but PAPER!


This is getting really exciting!

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