Japan is Recovering Says Government

The Japanese government raised its view of the economy for March, the Wall St. Journal reported today. It was the 1st time in 8 months. The report was released by the Office of the Cabinet. The report emphasized that the risk of prolonged deflation choking off the nation's nascent recovery still lingers.

In the March report, the government raised five components of the economy: consumption, capital spending, corporate profits, housing construction and employment.

Consumer spending is "picking up," while business investment "is starting to level off," the report said, adding the job market appears to be recovering as firms' earnings are improving.

Expectations are growing that the BOJ will adopt additional monetary easing steps at its two-day policy board meeting ending Wednesday

Japan's economic "outlook is growing a little brighter," said Finance Minister Naoto Kan said at a press conference after the release of the economic report. He cited rebounding industrial output, signs of business investment bottoming out, firming stock markets among others. "I feel that concern over a double-dip recession is beginning to dissipate," he said.

I reported at Benzinga about a month ago, that Byron Wien of Blackstone Capital was looking for the Japanese stock market to outperform this year. Here is a portion of that article.

“One way to play a Japanese rally is through a Japanese mutual fund, available here in the U.S. After doing some research at Morningstar I’ve come up with 2 of the best, no load funds. The one I prefer is the 4 star rated, (SPXJX), Hennessy Select SPARX Japan Fd. The fund is up 1.3% year to date. It’s a concentrated fund, with only 28 stocks. It holds mostly large cap stocks.

The 5 star, DFA Japanese Small Company fund, (DFJSX), is a bolder pick. With 1,309 stocks in the portfolio and only a 5% turnover, there would most likely need to be a broad based small cap rally in Japan, for it to outperform other Japan funds.”