Wow. Japan’s Retail Sales Collapse 9.7% (Y-o-Y)!

What has Abenomics delivered to her real economy?

From Bloomberg: (bold mine)

Japan’s retail sales fell in March the most since 1998, cutting against central bank chief Haruhiko Kuroda’s view that cheaper energy will give a boost to the world’s third-biggest economy.

Sales dropped 9.7 percent from a year earlier, when there was a run-up in purchases ahead of an April sales-tax increase, according to trade ministry data released Tuesday. Sales sank 1.9 percent from the previous month, compared with a gain of 0.6 percent forecast by economists in a Bloomberg survey.

Sorry but cheap energy will hardly give a boost to the economy. This represents merely a shift in spending patterns as earlier explained here. Income growth is what really drives consumer spending growth. Although transient spending boosters can emerge from credit expansion or from depletion of savings, the latter two are unsustainable.

As I wrote in June 2014

It’s a wonder how the Japanese economy can function normally when the government destabilizes money and consequently the pricing system, and equally undermines the economic calculation or the business climate with massive interventions such as 60% increase in sales tax from 5-8% (yes the government plans to double this by the end of the year to 10%), and never ending fiscal stimulus which again will extrapolate to higher taxes.

The mainstream has all been desperately scrambling to look for “green shoots” via statistics. They fail to realize that by obstructing the business and household outlook via manifold and widespread price manipulations, this will only lead to not to real growth but to greater uncertainty which translates to high volatility and bigger risks for a Black Swan event.

No worry. Crashing retail sales means HIGHER stocks!