Asia today - Japanese election, Australian budget, Indonesian rupiah

So Asia is all about Mr Abe's (not unexpected) victory in the Japanese election today...

 ...a victory which was achieved with a broadly unchanged underlying Parliamentary position: 

 

And the impact of another 5 years of a huge economic experiment?  A lacklustre reaction from both the Japanese FX and equity markets.  

My personal view remains that Japan is somewhere between a rock and a hard place with the likely end scenarios some combination of a much weaker yen, a highly volatile stock market (not totally unopportunistic especially amongst the larger exporters) and ultimately some form of debt consolidation (on a ten year view). The only hope remains radical supply side reform but so far don't hold your breath...

Reflecting continued challenges in the Japanese economy, today's Tankan’s big manufacturer index slipped to 12 in December from 13 in September, As Fast FT noted 'the overall assessment of business conditions improved since September by a single point to 5, where a positive number denotes a "favourable" environment. But companies' forecasts for conditions in three months' time produced an average score of 1, with a particularly gloomy outlook among smaller companies'.

Maybe the Japanese economy should more fully embrace its tourism scope via the weak yen

What else in Asia? In a mid-year budget update, the Australian Treasury predicted deeper budget deficits in the coming years, as falling commodity prices result in slashed revenues and lower tax receipts. The Treasury said it is now projecting a deficit of A$40.4bn in the 2014-15 year, versus an earlier estimate of $A29.7bn. The mid-year budget update doesn't foresee a budget surplus until 2019-20.  Not the greatest signal for Australian assets...especially as the Governor of the RBA was on the wires late last week suggesting a weaker Australian dollar was optimal...

Meanwhile did you see that the Indonesian rupiah fell to a multi-year low too?  Currency wars are building sourced from Asia...

(chart sourced from Fast FT)