While the Japanese stock market reached record 10 month highs last week, the economic outlook hardly matches investor sentiment. At least not at the moment.

In the October to December quarter the Japanese GDP fell 1.2 percent, making it the third consecutive quarter posting a loss. Annually we are looking at a 4.5 slippage, following a 0.5% drop in 2001.

This quarter, the key suspect was the a 12% fall in coporate spending, mainly attributed to the high tech global slump.

Some hope on the horizon was an increase in consumer spending, something that has been missing for quite a while. Maybe a consumer led recovery is on the way following the healthier looking stock market?

Time will tell...