What an economic slowdown would mean for Japan

A shift in focus from rates to recession

Over the past eighteen months, Fed rate watching has essentially been the only game in town.

The market reaction to rising rates was narrowly focused on the valuations of more expensive stocks, and the rate at which their 'longer-duration' earnings prospects should be discounted. In other words, the pain so far has been largely concentrated in the highly valued growth names. This has been particularly true in Japan where growth has been a rare and therefore popular commodity, resulting in some heady valuations, prone recently to swift and merciless selling. So much for the first phase of the bear market. To play devil's advocate however, what if we do see a prolonged global r...