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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote (41422)7/6/1999 6:50:00 PM
From: pater tenebrarum  Read Replies (3) of 94695
 
Bill, the relatively strong Tankan report is a prelude to what's coming down the road, imo, which is a massive shift of capital away from U.S. markets back into Japan. once this gets started via repatriation of assets by Japanese institutions, the unraveling of the yen carry trade will follow as night follows day. then you will likely get your long-awaited BK. of course the authorities will try to stop such a development at all cost, but i don't think it will be possible in the longer term. this would be a major event, as the potential of the derivative and hedge fund mess would finally be realized. Eisuke Sakakibara (Mr."Yen") has resigned, and when asked why he hadn't accepted another year at his post commented that he wouldn't want to be around when the U.S. market crashes, as he would have to be involved in dealing with the fallout inasmuch as it concerned Japan. of course this could just be a case of Japanese sour grapes by a retiring official who surely felt he lost a lot of face whenever publicly admonished by Larry Summers,but it is still a remarkable statement considering it's source.
since global financial markets are now used to being bailed out whenever something seems to go wrong, watch out for signs of complacency if and when the yen carry trade goes belly-up. it will be a sure sign of a lot of trouble ahead.

regards,

hb
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