CGPI growth continued to slow in the month of May,
bringing the annualized pace of growth down to 2.2 percent from 2.3
percent. Consumer confidence also deteriorated while bankruptcies
increased by 21 percent. Even though Finance Minister Omi said last night
that interest rates will have to rise in the long term, the data reflects a
country that is not ready for another rate hike. Corporations are clearly
hoarding their profits and not sharing it with their employees, which is the
primary reason why the country as a whole is facing such weak growth
prospects. However if the benefits of a weak Yen was to be reflected in
some piece of data, it would have to be in trade. The Japanese Yen
weakened significantly in the month of April and we expect this weakness to
provide a big boost to the current account surplus.
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