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Japanese factory orders hit a 3-year low in May on weak domestic demand and falling exports.  The latest metric to underscore the failure of Abenomics in Japan and that the world is still firmly in the grip of a deflationary credit bust.

There’s an old adage on Wall Street regarding analysts, “you don’t need them in a bull market and you can’t trust them in a bear market”.  Apparently this applies to the Chinese as well as the gap between analyst’s profit estimates on the Shanghai Composite and what is actually reported by the companies themselves has hit a 7-year high of 33%.  Put another way for every 3 Yuan that analysts expected these companies to earn they only managed to earn 2 Yuan.  I wonder if being off by a 1/3 is close enough for government work? You know I can’t help but think that the chicanery of leadership,finance, the lame stream media and ivory tower economists is going to come backand bite everyone on the rear end. Frankly at this juncture we are well and truly testing the masters ofthe universe theory, or can we in fact manage the economy by dictate whilst ignoring historical experience.  I’m reminded of the Dot-Bomb period when everybody swore blind that it was a new paradigm, things were different, fundamentals didn’t matter and the sky was the limit.  I always thought it was funny that the Dot-Bomb companies that survived the epic bust got religion about business and economic fundamentals on the other side.

This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.

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