Japan’s 31-year winning streak breaks. (That’s likely not good for global liquidity.)

“One important memory of 1990 in Japan is that dramatic things were happening in the equity markets, with share prices falling day after day. But the economy seemed to be unaffected. It went on growing quite strongly, in fact, for almost two years. A lot of economists and other observers concluded that the financial drama was therefore meaningless. It would prove quite temporary. An economist at one of the big securities houses told me that the Japanese economy was in a golden age, and this financial crisis would make no difference to it.” – Bill Emmott

Interestingly, the news that Japan has finally recorded its first year-on-year trade deficit since 1980–ending an incredible streak of 31 years of surplus (the Miami Marlins, formerly known as the Florida Marlins, could use some of that magic)–fits into the theme of falling global liquidity. 

Japan is increasingly becoming a capital importer instead of exporter.  If we add this idea to our view:

1. China’s reserve surplus may have peaked (hot money moving out)

2. Deleveraging by the Eurozone banking system should continue (badly hurt emerging market trade financing and credit to Central and Eastern Europe)

3. Possible fiscal restraint in the US (surprising for an election year and coupled with the lagged ending of earlier stimulus and corporate investment loaded into the fourth quarter) 

… it doesn’t add up to a rosy scenario of growth, that’s for sure.  

But there are alternatives.  McDonalds is hiring and we can always just buy Apple stock (wish I did); they are becoming a new world order all by themselves it seems.