Thread: Japan may report positive growth for the first quarter.
(This can & should be considered a lame attempt to stimulate posts on the now-slumbering Asia Forum Thread).
Due to the speculative runup in the Nikkei upon announcements of retructurings by Japanese blue chips, I have decided to long Japan for the first time. The decision stems not directly from the restructurings, but rather indirectly.
We were all astounded by our 6% growth figure in the 4th quarter.
No one was expecting greater than 2.5%. So where did the huge gain come from? I'm betting that it came from the sharp rise in stock prices over the 4th quarter, specifically from the over 80% rise in the Nasdaq 100. Companies with rising share prices appear healthier to lending institutions, which often become carefree with credit lines to high flying stocks - allowing the companies to borrow at favorable rates. Also, the higher share prices lead to increased meregrs & acquisitions, obviously, enabling a company with little equity & assets, like Yahoo, to pay billions for another company with little equity & assets, like GeoCities. The market's gains also lead to greater consumer spending, hence the low savings rate.
Now, with the Nikkei OTC small cap sector having a spectacular rally, and now the Nikkei blue chips rising impressively, plus the expanded money supply by the BoJ, I beleive that the same fundamentals are in place for a surprising growth figure. If I estimate that 3% of the 6% growth figure was directly tied to the market's ascent here, then I may place a figure such as 2% on the Nikkei rally, and maybe a 1/2% on the cut of interest rates to near-zero.....
Most forecasts, including Goldman Sachs', call for negative growth of about 1/2 a percent for the next results. I'm betting on 1% POSITIVE GROWTH, which will give the Nikkei another jolt higher to strong resistance at 20,000
Financial mkt moves supporting Japan economy--BOJ
TOKYO, April 13 (Reuters) - Recent movements in Japanese financial and capital markets are supporting the economy, a government official quoted Bank of Japan (BOJ) Governor Masaru Hayami as saying on Tuesday.
''Financial and capital markets are moving in a direction that is supporting the economy overall, and this favourable development is continuing,'' Hayami was quoted by an official of the Economic Planning Agency (EPA) as telling a meeting of economic ministers.
Referring to recent increases in bank lending, Hayami was quoted as saying, ''We hope that the improved environment will gradually have positive effects on the economy, but we will continue carefully monitoring the situation.''
-------------------------------------------------------------------------------- |
