The trend of Japan's economic recovery won't stop. The central bank seems to become increasingly confident that it can change policy around the middle of 2006.
This shows the increase in spending is not due to a one-off factor. We are seeing consumers becoming more and more confident about the future economic trend.
Consumption is strong and wages are rising, so the CPI trend is improving. In six months, deflation will be over.
We are seeing a good, healthy cycle now. One possible risk factor, going forward, is the possibility of overheating.
Oil prices are high but they are showing signs of relative stability.
It would be a big surprise if the ruling coalition didn't get a majority.
We are seeing a series of good indicators pointing to solid recovery: improving production, improving exports, improving employment and improving spending.
Combined with the election outcome, which will have a long-term impact on the economy, we could see a virtuous circle of politics, the economy and asset classes.
On major economic policies, the campaign has made clear that both parties share the same basic concepts of reform and small government.
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