ken's Comments

Weak Yen Likely to Weaken Further Ahead of Bonus Payouts

Fri, 25 May 2007 12:54:22 -0400

Good post, one of the better ones on Japan I've seen in a bit. I was also unconcerned about the media hype on the unwinding of the carry trade a few months ago, since the rates still won't go over 1% before New Year's, which is still plenty of time.

The OECD still weighed in with a report last week on how the carry trade is contributing to global asset price inflation, then followed that up today by warning Japan not to raise interest rates too soon. Someone has to figure out when to pull the goalie.

The Subprime Solution: Containing Global Contagion

Tue, 20 Mar 2007 16:20:26 -0400

Tough issue. For one, I expect the Fed to be proactive rather than reactive here. The housing bubble has not burst in the dramatic fashion that, for example, the Economist was saying it would a year ago. As far as effect on the carry trade goes, I can't see much just yet - Japan's overnight call rate is still 0.5% and doesn't look to go anywhere above that until after upper house elections this summer, due to political pressure. That might not be as appealing as the 0% rate last February or the 0.25% rate two months ago, but it's still low enough, and should last long enough, to make some aspects of the carry trade still appealing to the non-risk averse. Japanese equities still look very appealing from Stateside, from what I'm hearing, though I wonder about some of the picks I often hear of...

BoJ Holds at 0.5%, Yen Weakens, Nikkei Adds to Yesterday's Gains

Tue, 20 Mar 2007 16:12:05 -0400

The tankan survey is being projected to decline, which makes it all that more interesting to watch. It looks as though the BOJ is locked out of another rate increase until after upper house elections this summer, due to political pressure. Keidanren is pushing for a hike in consumption tax from 5 to 7 percent - can the economy take both a hike in consumption taxes and another rate increase later in the year? With wage increases pinned to bonuses, this will be an interesting experiment, to say the least...

James Grant's Long Case for the Yen

Mon, 19 Mar 2007 12:56:19 -0400

Steve, thanks for your comment. I guess I was wondering if it was something that Forbes should have mentioned in the article, ie, that there was a foreigner behind the break-up. You're definitely right about that aspect of it being a blip on the radar, there's no doubt that the transaction involved some very large firms in a deep-seated industry; I suppose the question that only time can tell is the extent to which shareholder value and activism will go. Thanks for the info on Ichigo.

James Grant's Long Case for the Yen

Mon, 19 Mar 2007 03:21:07 -0400

Late in February, for example, a Japanese fund manager did the heretofore impossible. Ichigo Asset Management, with all of $25 million under management, solicited more than 42% "no" votes to oppose the proposed acquisition of Tokyo Kohtetsu Co. by Osaka Steel, a union blessed by the two corporate managements and therefore, under the old rules, a done deal. But the rules have changed, and the merger is off.

Except, as far as I know, the 'Japanese fund manager' in question is actually Scott Callon, an American. I suppose it doesn't really matter, but it's a tad confusing. Should he be "The manager of a Japanese fund?" Is it necessary to mention that Ichigo is a Japanese fund under foreign management?