Don,
I am a frequent lurker to this thread and I wish to publicly thank you for your informative posts. I like your approach and analysis; and your sharing of thoughts. I agree with much of your last post but would like to comment a bit on Asia. Specifically Japan.
I have been interested in watching that market for quite awhile. I generally watch a live chart of the Nikkie for most of the session . I also consistently read a few Japanese newspapers.
FWIW, I have a few comments about Japan. Keep in mind that it is always risky predicting stock movement in Japan because of artificial
involvement by government controlled or influenced pension funds. That said, I do not think the underlying economic fundamentals justified the recent rise in the Nikkie.
I think it was a result in large part of short term enthusiasm created by the banking reform act and government intervention. The latter, I believe, was motivated in part by the goal of not being blamed for the woes of the world. Recent economic data support this view. In addtition, I think it likely investors will reassess the short term affects of the reform. I do not think they will continue to conlude that such a rosy forecast is merited. My experience here in the US is the banking reform (such as the S&L bailout) produce short term economic pain
when implemented properly. I believe Japan's banking problems are considerably. greater than our S&L problems.
As far as the no pain no gain point of view; a real disposal of the bad loans and assets secured thereby will very negatively affect the near term prices of the related assets. It will also result, if done properly, in the closing of many business and loss of jobs. That sounds terrible. . But Japan must ultimately address its overcapacity problems.
Hopefully, however, at some point during or near the end of the process, the consumer will see the "bottom" and thus may start buying again. It is important in my view to revive the real estate market; it drives many ancillary businesses. I just cannot see that happening to any significant degree while an asset dump threat by the banks is overhanging the economy.
Thus, with some trepidation, I expect the Nikkie to be a net loser for the week. I could, of course, be quite wrong. I realize your posts basically deal with a technical perspective and I appreciate them greatly. The foregoing is my fundamental perspective of Japan. Its free, so take it for what it is worth.
Please continue your splendid posts.
Regards,
Tundra
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