The Shutdown Begins:What It Means To You

There have been 17 US Government shutdowns since 1970,and the last one was 17 years ago,in 1996 under President Bill Clinton.At that time,18.6% of government workers were furloughed,and it lasted for 21 days-the longest shutdown to date.
Before that one,there were two shutdowns in 1995.The first of those shutdowns resulted in a market rally.The second 1995 shutdown caused a market plunge,then a flattening out.
According to Tom Switzer of the US Studies Centre in Sydney,the last shutdown,in 1996,cost the Republican party dearly at the polls.In the end,it also led to significant compromise that resulted in economic prosperity.
This time around,the debt ceiling issue in about two weeks' time is even more important than the shutdown.If that goes unresolved,it'll probably spike an economic downturn.Now it's a very polarised environment.A dysfunctional hegemon will be bad for the US and for world markets.*
On a practical level,essential services such as national security and law enforcement,as well as air traffic control and pension payments,will continue to be provided.National parks will close,however,and 800,000 government workers will be laid off,crimping retail sales and tax revenue.The shutdown will untimately cost the government 300 million dollars a day,IHS calculated,and Bank of America said a two week shutdown would shave a half percent off GDP growth.*
US stock futures rose slightly,along with Asian stocks,immediately the shutdown began at the stroke of midnight Tuesday.Apparently everyone who wanted to sell the news had already done so by the time it actually happened.In the commodities markets,gold was flat and oil declined about a half percent.*
If the US Government is dysfunctional,the Japanese government is anything but.The Japanese Tankan survey showed soaring business confidence;and the Abe government announced it will raise the sales tax from 5% to 8% in April 2014,then to 10% in 2015.There will also be a 50 billion dollar stimulus package to cushion the effect of the sales tax increase.

Should You Invest in Japan

Japan's Tankan survey has recorded a marked improvement in business confidence among large manufacturers.It went up to 4 in June from -8 in March.
According to Nicholas Weindling,a fund manager at JP Morgan Asset Management,this tallies with everything we're hearing from companies in the bottoms up survey we're doing.Hotels went up from 60 to 85 on rising prices per room.There is unprecedented demand for people to work in financial services.
It's all about looking to what Abenomics can achieve medium to long term.There are problems here,but there's a real sense of purpose.Everybody's moving in the same direction at the same time,which is different than before.
We see strong companies that are underappreciated just by virtue that they are located here in Japan.Banks,real estate,retail and services are big bets for us here.
Abenomics is the economic policies of Prime Minister Shinzo Abe.They include monetary and fiscal policies,as well as economic growth strategies,to encourage private investment in Japan.For instance,there is an inflation target of 2%,plus extensive quantitative easing,or bond buying,and limiting of the yen's appreciation,as well as a policy of increasing public investment.
iShares Japan Index Fund(EWJ)