The Japanese government of new Prime Minister Shinzo Abe is preparing to launch a stimulus package of 12 trillion yen (about 2,5% of GDP). Fiscal stimulus is often accompanied by prudent monetary policy, so as not to over-support, but this time, according to the intentions of the new government, there will be a one-two punch in the direction of expansion if the central bank bows to the directives governments (quantitative expansion of money to create inflation at a rate of at least 2% – currently we are at -1%).
After the good mood of the past few days, linked to the agreement on the 'fiscal cliff' in the USA and the good data on the American labor market, the Asian markets are reflective this morning. After seven weeks of gains, the MSCI Asia-Pacific regional index slipped from +0,3 at the open to -0,3%. The dollar strengthened: the euro is at 1.304 and the yen fell briefly to exceed 88 and in the early afternoon in Tokyo it reached 87,6. Oil is still strong at $92,6/b and gold has regained some ground at $1661/oz.
