As the Eurozone slips into outright deflation (with its associated systemic threat to over-indebted sovereigns), Germany insists that its economy reacts better to responsible budgetary consolidation than to persistent reflation
, the result both of historical experience and of ingrained social conservatism.
With the outlook of continued reflation
for risky assets, that is to say for equities, but not so much for credit due to its fair to slightly rich valuations; and also with the world of ultra-low government yields expected to come gradually to an end, but just gradually, as the challenges facing central banks seem to be quite formidable after the Great Recession.
Indeed, unconventional monetary policies in the US and other advanced economies have already led to massive asset-price reflation
, which in due course could cause bubbles in real estate, credit, and equity markets.
The most attractive sectors in Tokyo are securities brokerages (Nomura, Daiwa) property (Mitsui Fudosan) and trading companies (Mitsubishi, Itochu), these are all beneficiaries of the reflation
theme promised by Prime Minister Shinzo Abe and the Bank of Japan.
This is what will determine whether Japan's reflation
drive succeeds," HSBC said in a note.
For the first time, emerging and developing countries participated in a co-ordinated reflation
effort, and, alongside their advanced-country counterparts, promised to resist trade protectionism.
And few of these longer-term players seem poised for an about-face yet on their strategic view of gradual if slow and grinding reflation
- even accepting renewed volatility in the weeks ahead from Italy, the euro zone or Washington.
Focusing on tomorrow, there has been much leakage over what the ECB will actually deliver, but if it delivers a viable and credible operating framework, this will mean that the full collective force of the monetary policies of the major central banks will be geared towards the reflation
of aggregate demand, albeit in their different ways, some being more direct (eg.
Equities provide the most at tractive opportunities The equity markets should respond to a combination of monetary reflation
and fiscal restraint as long as pro-growth fiscal policies are part of the mix.
Our main underweight is still in cash, which yields very little and is inert to both deflation and reflation
The attempt to reconstitute the pre-World War I model of globalization collapsed in 1931, when domestic politics forced the British government to choose domestic reflation
over the gold standard.
Speaking at a national conference on the role of small and medium-sized enterprises (SMEs) in achieving economic security and social peace, in the light of the programme of the candidate Abdelaziz Bouteflika, Chenoufi pointed out that "social justice and economic reflation
, which are incumbent on national private and public economic operators, could not be achieved without a political stability.