Japan watch: a day after reporting a solid rise in exports in April, there are signs that the Japanese economy is still gripped by deflation, with unemployment up for the second month in a row. The jobless rate rose to 5.1% in April, from March’s 5.0%. Consumer prices fell 1.2%, but excluding fresh food, they dropped 1.5% after falling 1.2% in March. Household spending fell 0.7%, but retail sales were up by an annual rate of 4.9%. Economic growth was estimated at 4.9% in the first quarter, but the Tokyo stock market is down 12% so far this month. The fall in the CPI was boosted by the government’s decision to scrap high school fees. That pushed the CPI and core inflation down by more than expected. Excluding this the CPI was down 0.7% and core inflation down 0.9%, a little better than expected. The jobs ratio (that’s the number of people available for each job vacancy) fell for the first time in eight months.

US economy watch: the American economy grew slower than first estimated in the March quarter. The second estimate of GDP growth from the Commerce Department showed growth at an annual 3.0%, down from the initial figure 3.2%, and under all consensus forecasts of 3.3% to 3.4%. Business investment and  consumer spending were lower, as were contributions from the states and local government and the still deeply depressed housing sector.

Fizz watch: it’s the Memorial Day long weekend in the US … when the Indy 500 car race is held and TV viewing moves into non-ratings mode. It’s the start of the long American summer. That’s when sales of beer and soft rinks jump. This week has seen the break arrive early, with the huge Wal-Mart chain slashing the price of 24 can cases of Coke, Pepsi and other soft drinks to $US5 or less, and being matched by some competitors. Reuters reported this morning that so great has been the reaction from consumers that shortages have been reported in parts of the country ahead of the long weekend. In fact there are reports of Wal-Mart stores selling out of stocks. Putting aside the health risks from consuming large amounts of soft drink, it’s amazing what a truly competitive industry can do when it wants to. Nothing like that in Australian retailing where Coca-Cola Amatil has a cosy relationship with retailers all designed to enhance profit margins of  outlet and supplier and leave consumers poorer.

Inflation watch: it’s down in most of Europe, Japan (deflation) and the US. In South Africa, inflation is also moderating, down to an annual rate of 4.8% in April from 5.1% on March. Prices rose just 0.2% in April from March. So how come emerging economies such as South Africa and India can manage to produce monthly inflation figures, and advanced Australia can’t? Time for the Australian Bureau of Statistics to pull its finger out and do it, regardless of what the current review suggests.

Sovereign risk watch: for the noisy people at the top of Rio Tinto (a well-known foreign mining company) who have been moaning about the sovereign risk in Australia’s resources tax, here’s a little reminder of a continuing nightmare; Guinea and the Simandou iron ore project. According to this report on Bloomberg yesterday, three of the candidates in the presidential elections in Guinea have pledged to review mining contracts that are seen as being unfavourable to the country’s interests. The contracts include those in bauxite, gold and iron ore. Bloomberg says the country “is being run by a transition council that was appointed after General Sekouba Konate ousted the country’s former military leader, Captain Moussa Dadis Camara, in December. Konate’s junta and opposition leaders signed an accord in January that provided for the establishment of a unity government and a national vote to be held next month.” Australia could look safe and secure from mid-year.

UK watch: the Conservative-Lib Dem government in the UK has upset one of its staunchest supporters (no, not the Murdoch regime), the Telegraph, that bastion of right-wing thinking. It has started a campaign overnight against plans by the new government to boost the capital gains tax from the present 18% to at least 40% and possibly 50% (to roughly match the top tax rate). The Telegraph quoted an American fund manager Fidelity International as warning the increase could hit long-term investors. It will actually hit all investors, especially Fidelity and its ilk. Shades of Australia’s resource profits tax brawl! “Today, The Daily Telegraph launches a campaign against the proposed tax increases and invites readers to lobby George Osborne, the Chancellor, to reverse his plans, which are due to be unveiled in the emergency Budget next month. Fidelity’s intervention will add to the pressure David Cameron is facing from senior Tories over the issue.” Take that, David Cameron. So what chance of cutting Britain’s deficit of £156 billion? Everybody wants someone else to pay.

Car watch: Honda has a problem in China. Industrial action at one of its plants has forced it to stop production at the four plants. Media reports say more than 1800 workers at a Honda transmission factory in Foshan, in southern Guangdong province, went on strike to demand higher wages. A company spokesperson confirmed that the industrial action has disrupted operations at assembly plants in Guangzhou, the provincial capital, and Wuhan in central China. The Foshan facility closed on May 24, with Honda’s three Chinese car factories following suit on Wednesday. Life in a workers paradise? It’s not the Foxconn plant in Guangdong where reports say there are nets being put around dormitories to catch people trying to leap to their deaths. They missed an 11th worker who fell to his death yesterday.

Abbott watch: In an interview on Newcastle radio last week Tony Abbott said this: “We saw a situation a couple of decades back where the state Labor government whacked a big extra tax on mining and that basically did terrible damage to New South Wales coal mining and it gave a great boost to the Queensland coal industry because they weren’t under the same disadvantage.” He was talking about the move in the late 1970s by the Wran government to take over the private coal royalties in NSW for the Crown. Abbott obviously knows nothing about what happened since then because the Hunter Valley is now the largest source of coal in NSW and Newcastle is the biggest coal export port globally. Now just where was the “terrible damage” that Abbott claimed? If that’s the standard of his research, then his criticism of the super profits resource tax at the moment is dodgy.

Austerity zone watch: Spain’s entry card into the world’s most undesirable group, the eurozone (aka Club Austerity), nearly came a cropper overnight. The country’s parliament approved by just one vote the €15 billion package of spending cuts aimed at reining in its huge public deficit and easing fears of a Greek-style debt crisis. The package, which includes a pay cut for civil servants, was passed 169 votes to 168. The governing Socialist Party backed the Bill while all others, including the conservative opposition Popular Party, either opposed it or abstained.