Steven Towns

Some are taking the Lehman collapse anniversary as a time to go super-bullish. The Dow returning to 14,000, Jon Markman? "In three years? Not a problem. The signs are abundant, if you know where to look: in the corporate credit markets, in employment trends, in consumer credit trends, in government statements and in corporate revenue trends."

Sounds like Mr. Markman is selling the Kool-Aid: [paraphrasing] sentiment surveys out the window (little guys have too little money); big money (read bearish hedgies) doesn't mean 'smart' money, so expect a massive short squeeze; and some companies raised their estimates by a few pennies. Get ready for Dow 14,000, in three years. Wait a minute, isn't he writing to an audience basically of little people (asset-wise).

Japanese Lesson for U.S.: Demographics Matter a Lot

This article is kind of amusing if you think about it: blaming the Nikkei and JP real estate busts on demographics. Fair enough, if it's a case of not being able to sell (an already overvalued asset) at a higher price to someone of lesser common sense or none at all. However, had you said that demographics became a factor post-crash, then I'd agree completely because it goes without saying that doom/gloom permeated throughout Japan, crimping not only consumption, but also "conception."

Japanese Investors Saying 'No Thanks' to Government Bonds

Donald, while there are of course are other factors, the bottom line is that the yield is so paltry as to dissuade Japanese individual investors who have been earning even less on cash deposits and suffering in a deflationary environment to boot. Also, don't miss the fact that the Japanese savings rate may be down, but the Japanese have a tremendous amount of accumulated savings.

On Nov 05 12:24 PM Donald Ingram wrote:

> Other factors are to be considered besides low returns;
> 1/ An aging work force.
> 2/ A much lower savings rate.
> 3/ High unemployment.
> 4/ Collapsing export market.
> 5/ Diminished tax returns.
> 6/ Crushing social obligations.
> 7/ New, inexperienced government.
>
> To put forward your reasoning as just the poor rate of return, vis
> a vis the low interest rate, is to ignore the above mitigating factors.

Japanese Equities: Land of the Relatively Rising Sun

Don, good article, and no doubt that EWJ has size and liquidity. Ironically, as I published recently (available on SA by searching ticker EWJ or my website at steventowns.com for those interested), its size and liquidity are exactly what did it in, or more precisely, what did in the Japanese equity market. The massive deleveraging last autumn handily took the N225 to a 26-year low. And relative yen strength has basically been the coup de grace for Japanese equities. I am not too excited about investment funds that are in the red but outperforming relatively. And in this case, any significant recovery for EWJ would necessitate a weaker yen, which would impact the fund's returns. I would be more interested in cherry picking some of EWJ holdings for accumulation and dividend reinvesting.

Japanese Investors Saying 'No Thanks' to Government Bonds

Based on demand: "The MoF now only expects to raise Y1.3 trillion (US$14.3B) this year from individual investors, down from a prior estimate of Y2.4 trillion, and considerably lower than the record Y7.2 trillion raised in ‘05." Also, there was an anecdotal report that an unnamed large domestic financial institution canceled its plans to promote the October individual investor JGB issue and instead direct clients into one and two-year emerging economy notes.

On Nov 05 12:33 PM user225084-justme wrote:

> >>The Mainichi Shimbun (original in Japanese) reported early Thursday
> that Japanese Government Bonds’ (JGBs) popularity is rapidly falling
> among individual investors.
>
> How did the report arrive at the conclusion made that the bonds popularity
> is rapidly falling??

Ruth Madoff declares her Palm Beach, Florida home as her primary residence, potentially shielding the $9.4M estate from creditors.

Interesting. Why not expropriate, liquidate, and redistribute proceeds (no matter how insignificant given the broad number of victims)? Ruth could live somewhere else far more modest.

Japanese Investors Saying 'No Thanks' to Government Bonds

@dieuwer: Re-read/think over my last paragraph. The point of this article is about yield, not marketing timing. Also, I'm sure you realize there was also a big tech (IT) rally in Japan, too. And believe it or not, gold has appreciated obviously in yen.

On Nov 05 03:40 PM dieuwer wrote:

> Local deflation should be meaningless to local Japanese investors.
>
> So what there was deflation from 1990 - 2000? Japanese could have
> invested in NASDAQ stock and make a 10-fold gain.
> So what there supposedly is deflation since 2000 again. Japanese
> could have invested in gold and commodity stocks and make a fat gain.

In Memory of Greg Newton

Saddened to learn of Greg's death -- he will certainly be missed. It was a pleasure to read his pieces over the past few years. Equally pleasing was sharing his blog, Naked Shorts, with others; and in some cases, trying to explain both what it meant to be short, and a naked short! My condolences to his family and fiancee.

Sector ETF weakness: Gasoline– UGA -3.9%. Gold Miners– GDX -3.1%. Silver– SLV -3.1%. Oil– USO -2.9%. Steel– SLX -2.8%.

Still wondering what's up with all the talk (hype?) about backwardation? Compelling topic ... perhaps real cases of manipulation. And how about Paulson & Co. throwing down $1.3B for AngloGold Ashanti?

Japan's Nikkei: Black Hole or Buying Opportunity?

Let's not forget to recognize the reality in what is not being published, or in many cases is never published (except perhaps in The Economist): Japanese individuals have comparatively little of their wealth allocated to the stock market. This matter is a blessing in a deep bear market, but in recent years it hindered sustaining the recovery from '03 to early '07. That the N225 hasn't fallen with recent economic data is not something to be bullish about. Take for instance the horrendous GDP figure just published. No real reaction ... since, well maybe it was partially factored in; but more importantly, U.S. players sat the session out for the holiday back home, and market participants in Japan were awaiting the reaction of when European markets open. I wouldn't be bullish about the N225 happening to be above its low of last year. What's worrisome is that it and other indices have rather quietly fallen back to those levels. My take is that Japan is largely and rightfully at/around fair value. EWJ is not a good proxy given the counter effect of the yen (unless one has appropriately accounted for it). But without a weaker yen, EWJ will not be in play in any meaningful way. Worst case is the status-quo.

UnionBanCal - the California lender that dodged much of the housing collapse by avoiding subprime loans - is getting a "preemptive" $2B injection from Mitsubishi UFJ (MTU), which bought it last year, to safeguard against loan losses.

Poor shareholders in Japan and of Japanese banks. Not only did Mitsubishi UFJ pay way too much for the UBOC shares it didn't own at the time (see my coverage on SA: seekingalpha.com/artic..., seekingalpha.com/artic..., and seekingalpha.com/artic...), it now has to inject $2B!

Citigroup (C -4.1%) Chairman Richard Parsons says the bank will repay TARP with "a decent return" for taxpayers, though he can't say exactly when. It'll still likely be sooner than AIG (AIG +6.3%).

I am not sure whether I'm supposed to laugh at Mr. Parsons declaration or not. What if you are a shareholder and a taxpayer? Apparently no bump for C's stock like there was w/ AIG.

The triple-A sovereign debt ratings of the U.K. and the U.S. aren't at risk in the 'near future,' says Moody's. Only a sustained increase in government debt over several years would warrant a downgrade, which Moody's doesn't anticipate.

Puzzling.

Zero Hedge digs up a weird disclaimer for Goldman (GS) clients using its 360 investing portal: "Your use of the products and services on this Web site may be monitored by GS, and the resultant information may be used by GS for its internal business purposes." Does that mean frontrunning?

Brilliant! Good eye, Zero Hedge!

A Look at Japanese Stock Valuations

Not sure why you had to choose to pick on Madonna. I'd argue that she's been far more successful than Japanese political leadership since she's remained relevant by way of recreating herself as necessary over the years. As for JP leadership, it's more like they're wearing the same "panties" (think LDP), as it's just more status quo and the overall situation is worsening / becoming more convoluted -- perhaps from not really changing the underlying, or at least not in a meaningful way (ex-Koizumi).


On Jun 05 12:27 AM doubleguns wrote:

> Japan changes prime ministers like Madona changes panties, leaving
> them with no leadership. As soon as they start to move in any direction
> a new captain is placed at the helm and he steers in another direction.
>
>
> Thier stock market will just flail around until some leadership establishes
> a direction for the economy and is allow to stay on course.
>
> The only reason they have not ran aground so far is they have stimulated
> the hell out of the economy to the point that the debt is 100% of
> GDP
>
> It would seem the master (seekingalpha.com/symbo...) is now
> taking lessons from the student (Japan).