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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (6998)	7/16/2003 5:50:43 AM
From: Hawkmoon	Respond to of 33421

Interesting article Jon... I have some concern to what's going to happen when people realize there's a bubble in US bonds that rivals the Nasdaq bubble.. The sell-off could be severe and cause significant ripples through out other markets. Which begs the question.. Is the Bush administration's record deficit spending the Treasury's way of making sure there is sufficient liquidity in the treasury markets by providing new supply of debt? The Democrats are for a balanced budget right now, but were that the case, wouldn't interest rates be even lower, bond prices even more pricey, and the nation facing even more risk of a major bubble burst in the nation's debt? We have a $450 Billion deficit, yet interest rates continue to remain at low levels and the world's investors continues to prefer the safety of US T-bills.. Thus, it would seem Bush is trying to assist in deflating the bubble, effectively by printing debt. Hawk

To: Jon Koplik who wrote (6998)	7/16/2003 8:48:12 AM
From: MulhollandDrive	Respond to of 33421

>>Ministry officials are kicking around new ideas, hoping to make buying bonds as easy as purchasing postage stamps. The ministry is considering selling government bonds online and even through Japan's ubiquitous convenience stores. "We want to make bonds familiar enough so that ordinary people feel they can just slip on a pair of clogs and run out to buy some," Finance Minister Masajuro Shiokawa told reporters in April. Public-finance professor Mr. Atoda doesn't think that's enough. He and members of a key government advisory board are lobbying to put investment professionals in charge of supervising the market, rather than "amateur" finance bureaucrats.<< why not just set up bond kiosks in the shopping malls<g> (oh wait, they're not shopping)

To: Jon Koplik who wrote (6998)	7/18/2003 7:15:49 AM
From: macavity	Read Replies (1) \| Respond to of 33421

JGB's - The beginning of the end. These are going to be a great watch in the coming 6-24 months. IMO the Japanese Bond Market has peaked and we are witnessing the birth of the new rally in Japan. I am not able to view the data (on Bloomberg) and I have now left Japan, but when I looked at stuff about a month ago I was staggered. Bonds Bond yields appear to have retested support at 10Y~0.45% which was also the low in 1998. A 5 year double bottom? Perhaps. I have no idea where the neckline is/was but any decline in yields here/rally in bonds should be sold IMO. Stocks Here was the biggest surprise. A lot of major stocks were at 3 and 5 year highs (in JPY). I am not kidding. Nissan broke above 1000JPY - its 5 year high. When you take out BANKING and CONSTRUCTION out of the Nikkei/Topix most other sectors did not confirm the low this year. In fact a lot of them are above flat/upwardly sloping 1Yr MAs. Why is this The Bottom? Major bet is psychology. Banks (Resona) are being forced to puke their positions. Everybody hates JAPAN. I cannot get data, but there is a hidden BULL market going on there (exc. construction and banking). Rates rising will force liquidation by banks of bad loans and credit which will force them to close out bad positions. New capital will be attracted into Japan and will be more demanding. The vulture funds will begin to clean up. Middle-sized companies have no access to capital as they are being denied it by the bankrupt financial system and they cannot disintermediate the banking system (as in the US) and head for the capital markets (yet!). There is one hell of alot to do with a cost of capital of 1% p.a. Rising rates will demonstrate that there is a current excess of (real) borrowers to (captive) savers. They will have real capital projects to invest in unlike the phony construction companies. Over the next 2 years we will see Japan leave (slowly) its K-Cycle winter and enter its K-Cycle Spring. It is still a dual market: Inefficient protected domestic markets : BANKING and CONSTRUCTION Efficient companies with external markets : AUTO, DRUGS AND ELECTRONICS. -macavity