The back story: Abe took office in 2012, promising to revitalize the world’s third economy through massive monetary stimulus, increased government spending and structural economic reforms.
The program has yielded mixed results. Falling prices were overcome, but inflation fell short of the 2% target set by the Bank of Japan. The economy turned in several years of solid growth, but it could not switch into high gear before the coronavirus struck.
Abe cannot pinpoint the shortcomings of his program on Haruhiko Kuroda, who took control of the country’s central bank in 2013 and won another five-year term in 2018. Under Kuroda’s leadership, the Bank of Japan sent a ” bazooka “off who saw the interest dry rates in negative territory, buying waves of government bonds and exchanging funds.
Why it matters: The Buy-All Strategy pushed the Bank of Japan into what some economists considered “unconventional” monetary policy. It looks rather less now.
Large central banks around the world have responded to the economic crisis caused by the coronavirus pandemic by lowering interest rates to new levels while launching enormous quantitative programs similar to those started under the banner of Abenomics.
In the United States, the Federal Reserve has lowered interest rates to zero, but is under pressure to do even more. It buys $ 700 billion worth of bonds, provides credit facilities to large corporations, buys commercial mortgage-backed securities and even splashes out on exchanged funds such as the Bank of Japan.
Abe’s policies are expected to keep them in position for the foreseeable future. Analysts expect the prime minister to be replaced by another member of his party, and there is little prospect of an upheaval at the Bank of Japan. The dismissal means Abenomics will end up on “name only,” said Tom Learmouth of Capital Economics.
A Walmart TikTok deal can be ‘groundbreaking’
Breaking it down: China is experiencing a huge rise in social commerce, combining social media with insane online stores, reports our CNN Business colleague Sherisse Pham. The Chinese version of TikTok, known as Douyin, is one of several apps in the country that have applied the trend.
Know this stat: Social trade in China was a $ 186 billion industry last year. Why does Walmart not want to get into action?
Investors show support for the strategy. Shares of Walmart jumped 4.5% Thursday and are up another 2% in the pre-trade.
“We recognize that many operational and political details remain unknown, but consider the potential acquisition as groundbreaking,” Cowen analyst Oliver Chen told clients. “We are seeing TikTok accelerate [Walmart’s e-commerce] flywheel. “
Note: President Donald Trump has threatened to ban TikTok in the United States if Chinese parent company ByteDance does not sell the app in mid-September.
Even before the Walmart announcement, Microsoft was seen as the leading competitor. But Oracle is apparently interested in buying TikTok, too – and Trump had indicated that such a connection could have its blessing.
Wedbush Securities analyst Daniel Ives said he sees a Walmart Microsoft bid as a slam dunk.
“In our opinion, this is the last piece of the puzzle that ultimately cementes Microsoft’s successful takeover of TikTok’s US operations for probably $ 35 billion to $ 40 billion,” Ives said in a research note.
Even Corporate America thinks stocks are too high
A striking 84% of Fortune 500 CFOs say the U.S. stock market is overvalued, according to a survey published Thursday by Deloitte, reports our CNN Business colleague Matt Egan. That’s up from the 55% who felt that way a quarter ago. Just 2% of CFOs say U.S. stocks are undervalued.
The finding adds evidence to suggest that the wobble increase in equities, created in part by central bank policy, may be exaggerated.
Wall Street, for its part, thinks betting against the Federal Reserve is a risky move. Citi hit the S&P 500 year-end target this week in part because of “unimpeded Fed lighting.”
“We still think the market may be for itself, but the Fed will do ‘what it takes’ to prevent US equities from declining by teen-like percentages,” said Tobias Levkovich, Citi’s chief asset officer.
The big picture: Wall strategists feel they have no choice but to put their trust in Fed Chairman Jerome Powell and take action.
Next
U.S. personal income and spending data for messages in July at 8:30 a.m. ET.
Next week: The US employment report for August comes as economists worry that unemployment will remain stubbornly high.
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