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Asa Harrington

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  • Coach Vs. Kate Spade: Who Will Thrive? [View article]
    Hey thanks for the comparison. Pretty interesting to watch going forward.
    Jun 18, 2013. 09:19 PM | Likes Like |Link to Comment
  • Time To Open Japan Back Up [View article]

    I too am not 100% convinced that cultural inclination will mandate that the Japanese Government pays back its public debt. I stick by my original conclusion that Japan will not default and maybe shame will play a role in that.

    However I don't think austerity will be the answer to not defaulting. Look at how Greece has struggled with austerity and I believe the problem in Japan is much larger. If the interest rates even increase 1% from 1% to 2%, tax revenue will no longer be able to cover all of the debt service payments. I came to this conclusion by going over Japan's budget and seeing that in 2011 they had about 41 Trillion Yen in tax revenues and about 21.5 Trillion Yen in debt service payments which are completely influenced by interest rates. (btw the long term trend for tax revenue is down and debt service up). So just imagine if the interest rates right now are 1% and they go to 2%...Japan will have a hard time paying back through austerity. While a solution could be raising taxes like PM Noda has been lobbying for, it wont have much affect if interest rates increase say 3% long term. This is not crazy because yesterday yields in Portugal went up 3% in one day...

    So in the end I do not believe there is any way Japan can pay back its public debt back except by inflating and the depreciation of the Yen. This should lead to higher stock prices especially for exporters and the devaluing of the JGBs, which i am now short as well as a hedge against depreciation of the Yen.

    If you are interested in more analysis on the JGBs my next article should come out sometime tomorrow.

    Recent News, Japan PM wants to double sales tax rate:
    Jan 31, 2012. 11:50 PM | Likes Like |Link to Comment
  • Time To Open Japan Back Up [View article]

    I apologize for the late reply. I admit the dividend on JOF and JEQ are nothing to brag about. If the Yen depreciates, the exporters and Japanese companies in general should be able to better compete globally (stock prices should increase.) I think companies in a robust economy like in South Korea where the currency is not holding back South Korean companies will not see the gains in competitiveness that companies in Japan will see when the Yen depreciates. Also if Japan does inflate, this will negate some of the gains for these stocks. However to hedge this currency risk I have set up positions shorting JGBs (Japanese Government Bonds) because as the Yen depreciates so should the bonds. So I feel with a combination of both JOF, JEQ and shorts of JGBs I have attained a reasonably good position for the Yen devalues.
    Jan 31, 2012. 11:50 PM | Likes Like |Link to Comment
  • Japan: The Backdoor To Emerging Markets [View article]
    Great article. I agree that valuations and price to book values are at near 40 year lows, which are great signals for potential investors. Also, now the discount is almost 80% from the peak back in 1990. However I think you are missing a piece of the argument for the potential upside in Japanese equities: the looming National Debt to GDP ratio. See this for a more in depth analysis of how the Japanese National debt problem could be the catalyst needed to spark Japanese equities to life,
    Jan 7, 2012. 01:14 PM | Likes Like |Link to Comment
  • Is It Finally Time To Buy Japan? [View article]
    The catalyst is the 220% Debt to GDP ratio and extremely low interest rates. The Japanese Government’s current borrowing rate and upcoming interest payments appear unsustainable, which I believe will lead to inflation, weakening of the Yen and the improving success of exporters in Japan such as auto and tech industries.

    Japan currently has their lowest P/B ratios in over 40 years (at 0.8) as well as very attractive P/E valuations compared to the US.

    A more in depth analysis of Japanese equities,
    Jan 6, 2012. 01:27 PM | Likes Like |Link to Comment
  • Japan: A Good Place To Invest [View article]
    Japan is the place to look to invest in the near future. P/E valuations look very attractive and P/B ratios are at the lowest they have been in over 40 years! A more in depth analysis of Japanese equities and the catalysts that will drive them to become great investments,
    Jan 6, 2012. 12:20 PM | Likes Like |Link to Comment