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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 147.44-0.6%Nov 17 3:59 PM EST
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To: Jess Beltz who wrote (5993)6/23/1998 12:19:00 PM
From: Robert Douglas  Read Replies (1) of 10921
 
Jess, you wrote.

As things stand, with the banks in such a precarious position, the MOF can't touch rates without destroying the banks (rising rates always move banks' funding costs up immediately while incremental rises in revenues come much later. That's why a rate rise always punishes banks stocks dramatically.)

This may be true and may not be true. I am not extremely familiar with the Japanese banking system, but in this country banks typically structure their cost of funds to mirror the loans they have outstanding. If they have issued loans at fixed rates they try and match this by selling fixed rate instruments such as CDs which will not adjust until maturity. More and more a banks assets bear a floating rate while their liabilities are at fixed rates. I have owned bank stocks during periods of rising interest rates where their earnings have actually gone up! Remember it's the interest rate spread and not the level of rates that determines bank profitability. Unless the Japanese banks have been horribly negligent (always a possibility <g>) rising interest rates may not have the punishing effect you suggest.
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