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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Gary Wisdom who wrote (28304)	10/3/1999 9:59:00 PM
From: Benkea	Read Replies (1) \| Respond to of 99985

Gary: Higher rates cause a HIGHER buck, not a lower one.

To: Gary Wisdom who wrote (28304)	10/3/1999 10:00:00 PM
From: Don Green	Read Replies (2) \| Respond to of 99985

Tankan Shows Profits Strong Despite Yen, But Capex Worse: Analysts TOKYO (Dow Jones)--Analysts said the Bank of Japan's quarterly survey of business sentiment - the tankan - was better than expected in September, despite the rise of the yen. However, worsening capital expenditures could weigh on Japan's nascent economic recovery. Kenneth Landon, senior currency strategist at Deutsche Bank in Tokyo: "The main DI was better than expected. One big thing is that big manufacturers see pretax profits rising 21.6% this fiscal year - better than 20.8% before, so the outlook didn't worsen despite the yen...The survey was taken when the dollar was at 109 yen or 110 yen. The BOJ can point to this and say there's no evidence that a strong currency is having a negative impact" on profitability. Yoshio Shukuwa, market economist, Sanwa Securities: "The tankan numbers show an improvement that exceeds expectations, but I'm skeptical that this can continue. There are still worries about this economic recovery - specifically, the rising yen. If the yen continues to show strength against the dollar, it could hinder the rebound. Those worries should keep JGBs supported for now, all across the yield curve." Makoto Ishikawa, economist at Japan Research Institute: "The data show that the economy has clearly stopped deteriorating but it's still questionable whether this will lead to a full-blown recovery. "What's most worrisome was the downward revision of big-manufacturer capital expenditures. This shows the strong resolve to streamline businesses and this, in turn, will put downward pressure on the economy through lower wages. "Also the company forecasts for dollar/yen appear to be higher than current levels. If the yen strengthens further, this will curb company profits and put downward pressure on the economy. "Regarding the BOJ's monetary policy, the improvement in the data has made it unlikely the BOJ will further ease policy in the next meeting." Jun Ishii, chief economist, Tokyo-Mitsubishi Securities: "There are fears that the yen could continue to strengthen. Those fears should continue to take precedence. Plus, there is still no confirmation that the economic recovery is sustainable. With the rise in the yen, that uncertainly could grow - which is good for bonds for now. But the end to bond market strength is near, and could come as early as next month. As for the tankan, it shows a rebound in sentiment in all sectors, but low capital investment is still a concern, and could continue to result in a downward revision in expectations."