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  • Japan: Not Buying The Debt And Depression Story  [View article]
    Whenever Japanese yen weakens, equity usually surges. This can be easily explained on most textbooks. However we have to take note that such correlated move are mostly short term as Japanese yen regained its strength pretty fast. So we really do not know whether they were fundamentally driven or simply make believed prophecy. There is a wise Japanese friend of mine who said that, contrary to what everyone thinks a weaker yen is going to save Japan, it might be the demise of the whole country! I took the idea with a pinch of salt although I don't completely dismiss it. He mentioned that a strong yen had helped Japan piled up on resources and Japanese corporations making acquisition oversea. On top of that, strong yen and deflation have helped the livelihood of its aging population keep going. Otherwise it may have to stretch the government coffer even deeper. Many people seems to contemplate the idea of weaker yen is a matter of how soon. But isn't that the same mindset of a higher interest rate in Japan since more than a decade ago ? It's still not happening ! Strong yen may remain for a long time so long as the very reasons that brought it here don't change.
    Oct 14, 2012. 06:25 PM | 1 Like Like |Link to Comment
  • Japan: Not Buying The Debt And Depression Story  [View article]

    I share your sentiments in buying into a grossly undervalued asset and simply wait out. The attitude is 'how bad can it go from here?' rather than 'how well it may turn out?' I had your recent book shipped from other part of the world as I try to look for some clues as to this what makes this country so cheap, so unprecedented! I'm no stranger to Japanese market as I'm a Nikkei 223 futures 'day trader' full time for the past 15 years. We have an endless list of victims who tried to catch the bottom of this market and it really stretched my belief to a new dimension.

    While I'm aware of the current fiscal debt, it does not change my mind to buy into it as I think the relationship between economic fundamentals are usually complex and hard to interpret as seen from the confidence and demand given to its currency as well as JGB. If we use only textbook knowledge, the world equity markets should not have come this far on such shaky ground anyway!

    The biggest challenge Japan face is deflation and its reluctance for changes. Recent conditions and spat with China all added pressure on its battered corporations to a point, I think, nothing can be worse! There must be a long list of undervalued stocks in Japan but unless foreign fund managers start to take a look at them, cheap is just going to remain cheap! However, I see a better chance now that the central banks all around are flushing this world with so much liquidity, people run out of cheap assets with reasonable quality and it won't take long for Japan to catch their attention.
    Oct 12, 2012. 01:59 AM | 1 Like Like |Link to Comment
  • Speculators are net long $51B in major equity index futures contracts, according to the latest CFTC data. By comparison - ahead of a major rally - they were net short $58B worth one year ago. (h/t Jason Goepfert)  [View news story]
    Many predicted that Sept was going to be a bad month, it didn't scare the bulls away..... Most equity markets made gains and I can't
    see why Oct is gonna be different ! Plenty of arguments that present prices do not reflect real economic condition, but shouldn't it be the other way around ? After all this is what the central banks hope to achieve through their actions. The market had cruised ahead strongly despite very difficult times in Europe, China and US. Lets give them the medal they deserve.
    Sep 30, 2012. 04:08 PM | Likes Like |Link to Comment