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]

Maybe the most important chart LT:

http://www.futuresource.com/charts/charts.jsp?s=LJBM06

So far, the jawboning is being percieved as just that.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

And they don't give us anything. June?

http://mdn.mainichi-msn.co.jp/business/news/20060411p2g00m0bu032000c.html

Still Nikkei must be getting narrow--JP Morgan seems to have the bases covered, 30% base materials, 20% Consumer 10 banking. Internet? Energy?

http://finance.yahoo.com/q/hl?s=JPNDX
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Fidelity missed something. There's something in the Nikkei that throwing the others off--and it's not bJGB tie-in.

http://stockcharts.com/symsearch?JPN

And so did most of the rest of these, all making lower tops.

ps BOJ meeting tonight. No-one expecting anything.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

New money tends to get deployed in the early parts of April in Japan.

Also, the year-over-year growth in the Japanese monetary base just turned negative for the first time since 2000. Longer-term, the Nikkei looks good - but sooner or later, this will correct in a big way.

[rffrydr]

Another day another gap up on Nikkei. Money is flowing again.

India Fund back at highs.

Did we fall for an end-of-quarter effect; or is this the "blowoff'? Tough.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Well here nearly a month after the Prime Minister comes out to prep nation for the end of deflation the Nikkei is pushing 17000--day after Fed.

Our bloated India fund was also up on Fed day. Who's not listening?

[rffrydr]

No rally here:

http://www.futuresource.com/charts/charts.jsp?s=LJB&o=&a=D&z=800x550&d=medium&b=bar&st=
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Today is the Tomorrow you worried about Yesterday!

[Goodfella]

sure if there are enough people in the trade a stampede can be caused easily, but baby steps wont make a tangible difference in yeild

maybe it could make the small psychological difference needed, i dunno

wait and react first to any situation as it unfolds

[HenryTo]

Keep in mind that the results of the latest BoJ meeting will be published at 3pm, March 9th local time. This is equivalent to 1am EST or midnight CST here in the U.S.:

http://www.boj.or.jp/en/seisaku/05/seisak_f.htm

All eyes are now on the Yen carry trade.

[HenryTo]

Yen taking a beating today on anxiety on the BoJ meeting as well as "negative news" on the M&A front:
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Yen falls as outflows prompt calls for caution
By Steve Johnson
Published: March 6 2006 11:37 | Last updated: March 6 2006 11:37

The yen fell in European morning trade on Monday as outward merger and acquisition flows augmented further calls for caution from the Bank of Japan.


The central bank stages a two-day meeting on Wednesday and Thursday, with some commentators suggesting that the bank will use the occasion to start reducing its reserve target range for quantitative easing, the pumping of excess liquidity into the banking system.

Such a move, signalling the end of Japan’s five-year-old ultra-loose monetary policy, would potentially clear the way for the BoJ to scrap its zero interest rate policy, possibly before the end of the year. This is turn would be expected to aid the yen.

However most analysts believe the BoJ will wait until April to begin the process of reducing liquidity, particularly after Junichiro Koizumi, the prime minister, urged the bank to “make a careful decision”.

“Koizumi indicated that there should not be a situation where the BoJ have to reverse course at a later date,” said Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi UFJ. “Other government officials added to the pressure on the BoJ and these comments have served to underline the caution needed to ensure divisions between the BoJ and government do not re-emerge.”

The yen was also hit by negative M&A flows, with Softbank said to be interested in buying the Japanese arm of the UK’s Vodafone, and news that General Motors has sold its stake in Suzuki back to the car maker for $2bn in cash.

Furthermore a survey by Japan’s ministry of finance has suggested that GDP growth data for the fourth quarter of 2005, which initially came in at an annualised rate of 5.5 per cent, may be revised downwards when updated figures are released next Monday.

Against this backdrop, the yen fell Y0.85 to Y117.19 against the US dollar, Y0.85 to Y141.03 against the euro, Y1.5 to Y205.75 against sterling and Y0.6 to Y87.24 against the Australian dollar.

Other major currencies were little changed, with data flow on the light side. The dollar traded at $1.2034 against the euro and $1.7554 versus sterling.

However the New Zealand dollar fell 0.4c to $0.6609 against the greenback ahead of a central bank meeting on Wednesday. Although rates are expected to be held at 7.25 per cent, the highest in the industralised world, the Reserve Bank may indicate that no further rises are likely, and thus that the next move will be downwards.

The South African rand was another to be hit by potentially negative M&A news, with suggestions that Polyus, the Russian gold miner, has put its 20 per cent stake in South Africa’s Gold Fields up for sale said to be behind the rand’s fall from R6.1865 to the dollar to R6.2252.

[Gizmo]

[HenryTo]

Financially, the private sector of Japan is definitely recovering. From this standpoint, I think 1% to 2% inflation will optimal going forward.

Like you said, however, the worry is government debt at 160% of GDP, and still growing. For more reading:

http://www.iht.com/articles/2006/02/27/bloomberg/sxpesek.php

In essence, Japan is a classic case study in high school macroeconomics (macroeconomics within a closed economy). 95% of government debt is owned by its citizens. In essence, the huge, INEFFICIENT, government borrowing has "crowded out" private sector borrowing - thus further retarding economic growth in the long-run. I don't think they need to reflate their way out - but they do need to start "kicking their habit" and aim for a balance budget. Once they do that, and assuming that the Japanese economy grows at a healthy 3% real rate going forward, any fiscal or Yen crisis should be averted.

What worries me, however, is the aging of the Japanese. Case in point: In five years, Japan is projected to start running a current account deficit - due to the fact that many of its citizens will have passed their peak productive years.