From that Barron's Roundtable discussion published in the latest edition, ...
Felix Zulauf: I have shorted some bonds. But the big trade here is shorting the JGB [Japanese government bond]. This is the top of the Japanese bond market. It is the sell of a generation. Short JGBs, buy the Nikkei. The Japanese market is underrated. There are important changes going on in Japan. The corporate sector enjoys a financial surplus. Japanese corporations have much stronger balance sheets today than the U.S. or Europe. Twenty years ago it was just the reverse. The recent decision by the Bank of Japan to buy corporate bonds and asset-backed securities is also great news. They are pushing liquidity into the corporate sector. Again, this is very bad for JGBs. This morning the 10-year was yielding 0.43%. I think we have a relatively straight move to 2%. [Indeed, the trade already has paid off. Ten-year bonds plunged late last week to their lowest level in months, pushing yields up to 0.73% in Thursday's session.] The Nikkei fell 80% over 13 years. In April it was around 7600. Now it's up to 9000. The next move could lead us quickly to 12,000. I see a lot of great news for the world. It's been rare in recent years that I had something bullish to mention.
Or, as offered on June 16 by UPI Business and Economics Editor Martin Hutchinson, ...
As for Japan, that country may now have purged its 1980s bubble and be ready to expand again. Gross Domestic Product figures for the first quarter have come out higher than expected, while Japanese corporate profits, particularly for the larger companies (which one would expect to benefit first in an upturn) have also improved significantly over the past year. It can thus be hoped, with some degree of realism, that over the next couple of years Japan will, quietly and unobtrusively and to general disbelief, lead the world out of the present unpleasantness and, after several more years of purging, into renewed economic growth for the United States and Europe.
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