JAPAN

[rffrydr]

Core rate up .5%; 3 in a row:

"Mitsubishi UFJ Securities senior strategist Naomi Hasegawa said remarks this morning by Prime Minister Junichi Koizumi fueled conjecture that the central bank will soon end its present policy.

'[Changes in] consumer prices are coming in above zero and we are seeing signs of getting out of deflation,' Koizumi told a parliamentary committee.

His comments were his most positive yet on recent indications that the economy is winning its battle with falling consumer prices. Previously, Koizumi had insisted that it was too soon to say that the economy was coming out of deflation."


Bonds and stocks were short going in. End-of-day showed resiliency, (complaceny?)

Hey Henry, Devil's advocate: with Japanese debt at a Godzilla-sized 160% GDP on the worlds fastest aging population (and most afraid of foreign workers) do they have any choice BUT to reflate their way out? And politicians want a decade for "reforms."

An end to quantiative easing may be announced at the end of Japanese Fiscal Year--but this could take a long, long time to play out. Markets 1st "verdict."
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Industrial Production, the granddaddy of japanese stats fails expectations--and the yen still up.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Definitely in a distribution pattern after three pushes higher, begging for an upthrust fakeout. The question is does this qualify?

For the very near future: Crude under 60 and I'm on it.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Interestingly, Euro Yen briefly spiked above the 164 level and is now trading back below that.

[diesel]

Thought about doubling up on my EUR/YEN short on this news but have decided to take a wait and see approach.



Chart shows good support here in addition to the price action.

[HenryTo]

Looks like the Euro-Yen cross rate will hold at 164. Lower-than-expected unemployment rate and higher-than-expected household spending in Japan is giving support to the Yen and putting pressure on bonds. Following is courtesy of Bloomberg:
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Japan's Jobless Rate Unexpectedly Falls to 9-Year Low

By Jason Clenfield

May 29 (Bloomberg) -- Japan's jobless rate unexpectedly fell to a nine-year low in April and households increased spending for a fourth month, suggesting consumers will help extend the economy's longest postwar expansion.

The unemployment rate dropped to 3.8 percent from 4 percent, the statistics bureau said today in Tokyo. The median estimate of 34 economists surveyed by Bloomberg News was for the number to stay unchanged for a fifth month. Household spending rose 1.1 percent, the bureau said, exceeding the 0.2 percent expectation.

Bonds fell on speculation falling unemployment will bolster wage growth and spending in the world's second-largest economy. Sustained growth in consumer spending may support the Bank of Japan's case that the economy is resilient enough to withstand an increase in interest rates, the lowest among major economies.

``A tighter job market is going to spur wage increases,'' said Naoki Iizuka, a senior economist at Mizuho Securities Co. in Tokyo. ``The spending report was encouraging and signals we may see spending exceed expectations this quarter.''

The yen traded at 121.70 per dollar at 9:56 a.m. in Tokyo from 121.73 before the reports. The yield on Japan's 10-year bond rose 2 basis points to 1.745 percent, the highest since February.

The ratio of jobs available per applicant improved in April for the first time in nine months, climbing to 1.05 from 1.03, the Labor Ministry said today. The number rose to 14-year high of 1.09 last July.

Labor Shortages

The drop in the jobless rate was driven by companies employing more graduates, the statistics bureau said. The unemployment rate for people aged 15 to 24 fell 1.5 percentage points to 7.5 percent.

``Young people who in the past couldn't find jobs out of college are now getting them,'' said Norio Kondou, a spokesman for the statistic bureau.

Toyota Motor Corp. is planning to increase its starting monthly salary for four-year college graduates in Japan from April, Nikkei English News reported in March. The 800 graduates will receive 202,000 yen ($1,660), up 1,000 yen from a year ago, marking the second year the automaker increased its starting pay.

Japan's largest manufacturers said in March they faced the worst labor shortages in 15 years. In Aichi prefecture, home to Toyota and its suppliers and subcontractors, there were more than two jobs on offer for each applicant last month.

Industrial Production

Manufacturers anticipate rising demand from Asia and Europe to offset slower growth in the U.S. Industrial production probably rose a seasonally adjusted 0.5 percent in April after dropping 0.5 percent a month earlier, according to the median estimate of 45 economists surveyed by Bloomberg News. The Trade Ministry will release the report tomorrow at 8:50 a.m. in Tokyo.

Central bank Governor Toshihiko Fukui said this month that improving job security has convinced people to loosen their purse strings. He has said the key interest rate, currently at 0.5 percent, needs to be raised gradually to sustain the economy's longest postwar expansion.

Still, even as job openings have outnumbered applicants for more than a year, the demand for labor has yet to drive wages higher. Average wages declined for a fourth month in March after rising 0.3 percent, or less than 10,000 yen ($84), in 2006.

Retail sales fell 0.6 percent in April from a year earlier, a seventh month of declines, the Trade Ministry said today. The retail report fails to capture the entire picture of consumption because it excludes Internet shopping and spending on services.

Baby Boomers

Economists say one reason for the recent decline in average wages is the mass retirement of Japan's baby boomers, a generation of workers born between 1947 and 1949, and their replacement by cheaper, younger employees.

Increased use of part-time workers is another reason. The percentage of part-timers in the total workforce rose to 33.7 percent in the first quarter from 32.9 percent in the fourth quarter last year, the statistics bureau said today.

From 1997 to 2005, when companies replaced regular employees with part-timers, wages fell about 10 percent, Labor Ministry reports show. One in three workers held a part-time or temporary position in 2006, up from one in five a decade earlier.

``Japanese companies continue to want to hold down labor costs, so it's hard to imagine a dramatic upswing in full-time hiring or wages,'' said Maiko Noguchi, an economist at Daiwa Securities SMBC in Tokyo. ``Things are moving in a positive direction, but it's going to take some time.''

Full-Timers

The number of full-time employees grew last year for the first time since 2003, and indications are the trend will continue. Fast Retailing Co., Japan's biggest clothing chain, will more than double its full-time workforce next year. Toyota, the country's third-largest private employer, plans to boost its domestic new hires by 11 percent in the year ending March 2009.

Mizuho's Iizuka said wages will climb once Japan's unemployment rate falls to around 3.3 percent, the level he regards as full employment.

The move toward more full-time hiring should be a boon to Japan's consumers, who prize job security above pay increases, according to Governor Fukui.

``Employees, having experienced a severe employment situation and currently facing intensifying global competition, have tended to prefer stable employment to wage increases,'' Fukui said in a speech this month.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net .

Last Updated: May 28, 2007 20:58 EDT

[HenryTo]

A manisfestation of the "conservative" culture in Japan. Don't get me wrong - Japan, for the most part, is a great place to live in. Streets are clean, crime is relatively minimal (at least compared to the major cities in the US). etc. As an aside, Japan is going to have to also find ways to deal with the teenagers that grew up in the lost decade of the 1990s - as many of these folks are now having severe problems of trying to get integrated back into society. If they are not vigilant about it, things could get out of hand.
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Little sympathy for rape victims in Japan

By Chisa Fujioka
Tue May 15, 8:45 AM ET

TOKYO (Reuters) - A man molests a young woman sitting next to him on a Japanese train, drags her to a restroom and rapes her while she sobs. Some 40 fellow passengers fail to intervene.

The case, which came to light with the suspect's arrest last month, shocked the public and prompted soul-searching in the media, which said passengers may have told themselves it was a lovers' fight but should have helped the woman.

Activists and lawyers say sentiment towards rape victims remains chilly in a society where many feel the woman may have led the man on, that she is lying or that she could have fought back.

Campaigns by women's groups and legal changes have helped make it easier for rape victims in Japan to speak up and take legal action against perpetrators, but many still stay silent out of shame and fear of criticism.

"There is still widespread belief in 'rape myths'," said Masayo Niwa, an official at the Centre for Education and Support for Women, Japan, referring to the perception, contrary to law, that only assaults by strangers can be defined as "rape."

"Victims don't report cases because they think society can't be trusted to believe them," she said.

Some victims' support groups estimate that rape cases in Japan amounted to more than 10 times the National Police Agency's official figure of 1,948 last year.

Sex crimes against bar hostesses or other women working in entertainment districts are treated especially lightly, and are seldom reported to support groups, activists say.

Japanese property developer Joji Obara was sentenced to life in prison last month for serial rape of eight women and for drugging, raping and killing Australian bar hostess Carita Ridgway. But he was cleared of killing British bar hostess Lucie Blackman in a case that attracted international media attention.

"They did not take me and my boyfriend seriously," Samantha Termini, Ridgway's older sister and herself a former bar hostess, told a news conference of her initial efforts to get police to investigate Carita's death.

SERIOUS CRIME

Some lawyers say prison sentences and compensation fail to adequately reflect victims' sufferings -- a sign that rape continues to be viewed lightly in Japan's male-dominated society.

Japan's top government spokesman in 2003 was quoted as telling reporters in an off-the-record briefing that some women were asking to be raped by dressing provocatively -- a remark that outraged many but failed to dent his political clout.

A legal revision in 2005 raised prison sentences for rape to a minimum three years and a maximum 20 years, but critics argue that the punishment is still too light considering the minimum sentence for robbery is five years.

In civil court cases, victims usually receive 20-30 million yen ($166,000-$250,000) in compensation.

"Compensation should be more, considering that rape is a crime that is as serious as attempted murder," said lawyer Hitoshi Yamada, a former head of the Tokyo Bar Association's committee on victim support.

Trials are often frustrating, Yamada added, with cases usually lacking hard evidence and courts having little understanding of post-traumatic stress disorder, a condition which afflicts many victims.

Still, the system is slowly starting to change and more women are taking rape cases to court and reporting domestic violence.

Legislation since 2004 allows women to seek restraining orders against husbands who are not only physically abusive, but who inflict sexual abuse, including forced sex.

In court cases for rape, women can now be accompanied by a counselor and victims of sexual assault or rape can also testify from outside the courtroom through a video link.

In 2000, Japan also scrapped a rule that had prevented victims of sex crimes from launching a criminal case if six months had lapsed since identifying the suspect -- a limit victims' groups had fought for years to change.

"It's become easier for victims to speak out," said Yukiko Tsunosa, a lawyer who handles rape cases, although she added that there was still a long way to go. "Victims are now better protected when they take their case to criminal court."

($1=120.26 Yen)

[HenryTo]

About time that they are starting to tackle these issues - but like the article says, building nice living and working accommodations for foreigners will not help a single bit. Moreover - other financial centers in Asia like Hong Kong and Singapore have always been ahead of Japan. What Japan needs to cut is not only red tape, but its acceptance of foreigners and more tolerance of other cultures and other languages, such as mandatory learning of English while kids are still very young.
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Japan aims to reinvigorate Tokyo as global finance hub

by Daniel Rook
Sun May 27, 2:46 AM ET

TOKYO (AFP) - Faced with growing competition from Hong Kong and Singapore, Japan aims to reinvigorate Tokyo as a global financial hub with a lofty goal of developing a new foreigner-friendly high-rise banking district.

The idea has raised eyebrows among foreign fund managers in the region whose biggest complaint about Tokyo is often not the lack of a decent office or apartment but high taxes and strict regulations.

Yuji Yamamoto, the minister for financial services, recently unveiled a plan for Tokyo's own version of London's Canary Wharf, a gleaming skyscraper banking district in once-derelict British docklands.

High-rise offices with 24-hour access and onsite health clubs would be developed along with housing complexes to encourage foreign banks to cluster in the area in the capital around the Tokyo Stock Exchange and Bank of Japan.

But Yamamoto did not say whether Japan would tackle high taxes and red tape, the most common complaints about Tokyo from fund managers, many of whom opt to work in Singapore or Hong Kong instead even if they manage Japanese stocks.

"Building buildings doesn't create a financial system," said one fund manager based in Singapore who asked not to be named because it could be bad for business.

"Japan has an unfavourable tax regime both for financial products and the individual. The overall operating environment in Japan is unfavourable because there is a deep suspicion of capitalism," he added.

Japan's government, concerned Tokyo has been losing business to rival financial centres such as Hong Kong and Singapore, has set up two expert committees to look at ways to boost financial competitiveness.

"Market share losses to London, Hong Kong, and Singapore have created a sense of crisis," Robert Feldman, a managing director and economist at Morgan Stanley, wrote in a report in February.

He said foreign managers in Tokyo often bemoan the lack of sufficient staff who are fluent in English.

Other frequent complaints include the length of time it takes to travel from Tokyo's Narita airport to the city centre and the firewall in Japan that means corporate and investment banking operations must be separated.

"There are still many many regulations which are a big problem," said Martin Schulz, a research fellow at the Fujitsu Research Institute.

He said firms were increasingly looking to integrate their banking and brokerage business which is not yet possible in Japan.

"This is where the money is and it's a problem for many of these banks," he said.

Britain's "Big Bang" overhaul of its financial regulations two decades ago and its pool of English-speaking workers helped to make London Europe's top financial centre ahead of Germany's Frankfurt.

The head of the Tokyo Stock Exchange, Taizo Nishimuro, also warned that the plan for a new district for foreign banks, while welcome, will not be enough on its own to boost Japan's financial competitiveness.

"We cannot wait until the time when those high-rise buildings are to be built before the Tokyo financial market gets bigger and greater," he told reporters recently, noting such "hindrances" as regulations and high taxation.

But experts say major foreign banks look set to stay in Tokyo, hoping to benefit from a pick-up in demand for stocks from Japanese individuals and investment banking opportunities in partnership with local players.

US giant Citigroup last month secured a takeover offer of the scandal-hit Japanese securities firm Nikko Cordial for 7.7 billion dollars as hostility to takeovers by foreign companies gradually abates.

And with the Japanese economy recovering from its long slump, Tokyo looks set to remain "a very big market which cannot be ignored by the bigger players," said Schulz.

[rffrydr]

Nikkei above 18000 first time in seven years:

http://www.cnbc.com/id/15840232?video=186448639&play=1
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Check with the British Banks.
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Today is the Tomorrow you worried about Yesterday!

[ohiosl]

I know this is off an older post but I have been trying to research a yen-based mortgage/HELOC for our property in Ohio. I have been reading where these are available and around 2% but have been unable to locate Japan. retail banks that offer these.

Does anyone have any information that they may be able to provide? Just came across MarketThoughts.com today but have been reading it for hours on many topics... it will now be "prayers before bed" followed by laptop to get caught-up on the days discussions.

Thank you.

[rffrydr]

Industrial production up .7 vs. expectations of .2:

http://www.iht.com/articles/ap/2007/01/30/business/AS-FIN-ECO-Japan-Industrial-Production.php

This is the key long-term indicator when it comes to Japan at a key time. Lower household spending was dismissed as weather artifact.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

December retail sales for Japan were disappointing but the rubber band is now getting very overstretched:

http://www.softwarenorth.net/cot/current/charts/JY.png

As I also discussed before, having a long position in Yen may also be a good hedge for stocks or anything that takes advantage of the Yen carry trade.

[rffrydr]

EUR/NZD divergence is confirming this trend.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

It's bouncing:

http://www.futuresource.com/charts/charts.jsp?s=EUJYY&o=&a=V%3A60&z=610x300&d=medium&b=bar&st=

Aussie negative inflatiion reading in combo with NZ (premiere carry) slowdown and British "pause"--all jumped on by their respective authorities started the ball rolling. The long slow churn in Japan has caught the trade looking right when the surprise, as it always does, came out of left field.

Now the G7 and BOJ meeting the week after have complemented this. Fixed period of "uncertainty" so close to the end of last year's leverage up--this could be a big blink if nerves go soft.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Thanks rffrydr.

That timeframe sounds about right. I have been looking for some kind of short-term reversal in early February. For now, however, the equity rally should continue for the rest of next week and probably into the first week of February.