Led by the auto industry, Japanese exports grew by 18.6 percent and hit a three-year high for the 12-month period ending in October. The exports rose from an 11.5 percent gain for the period ending in September, according to Japan’s Ministry of Finance. Unfortunately, this export growth has failed to meet early expectations, even though the yen has fallen about 14 percent versus the dollar in that same time frame. What would really help to fortify the Japanese economy is an increase in world demand outside of the U.S. private sector. So, while Prime Minister Shinzo Abe’s economic reforms continue to take hold in Japan, he hasn’t caused the yen to fall enough to make Japanese goods more attractive to nations outside of America. Once the yen falls enough to cause Japanese exports to jump, investors may want to take equity positions in the world’s third-largest economy. Until then, many investors likely will choose to wait.
Federal Reserve Chairman Ben Bernanke said yesterday, “The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end…” He went on to hint that the target could even endure long after the jobless rate in the United States hits 6.5 percent or lower.
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