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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (42167)	11/29/2003 2:48:08 PM
From: Joe S Pack	Read Replies (2) \| Respond to of 74559

On Not(Free Trade, Less Government, Total Market force) front Japanese are leading in a different way instead of sanctions regime. Japan to Nationalize Big Regional Bank biz.yahoo.com Saturday November 29, 11:12 am ET By Chikako Mogi and Chisa Fujioka TOKYO (Reuters) - In its first major outright bank nationalization in five years, the Japanese government said on Saturday it would take control of big regional lender Ashikaga Bank after inspections showed it was insolvent. It will be the second time in six months that public funds have been used to shore up Japan's banking sector, which is still struggling with huge bad loans and weak balance sheets left over from the bursting of Japan's asset bubble more than a decade ago. Speaking after a 20-minute crisis meeting, Prime Minister Junichiro Koizumi said he expected markets to react calmly. "We are temporarily nationalizing it but we will take firm steps to avoid any confusion," he told reporters. "We want to keep the impact to a minimum. I believe the markets will react calmly, given that we are protecting all deposits." Officials gave no figures for the cost, but financial sources said it could be more than one trillion yen ($9 billion). Ashikaga, believed to be the only Japanese bank that has a correspondent banking relationship with North Korea, had told the regulatory Financial Services Agency that its results for the half year to September 30 showed it had negative net worth. Just six months ago, the government injected 1.96 trillion yen ($18 billion) into Resona Bank, Japan's fifth-largest lender. In Resona's case, shareholders were protected and the bail-out marked the start of a big stock market rally. With Ashikaga, however, temporary state control will wipe out existing equity, although depositors will be protected. "The method of the public funds injection, which forces shareholders to take responsibility, is surprising given past public fund injections for Ashikaga and next year's Upper House election," said Eiji Dohke, chief strategist at UBS Securities. "Many in the markets had expected a Resona-style rescue, which would have been more generous to existing shareholders, and the market's reaction will be to sell stocks and buy bonds." Tsuyoshi Nomaguchi, strategist at Daiwa Securities, said the move would send a tremor through the stock market. "The market had seen a 50-50 chance of a Resona-type bailout," he said. Ashikaga had been in the spotlight as banking authorities shift their focus to regional lenders, which have lagged bigger banks in disposing of bad loans and repairing their capital. The bank, the core of Ashikaga Financial Group, dominates lending and deposit-taking in Tochigi prefecture, a mixed industrial and agricultural area north of Tokyo. BIG QUESTION ANSWERED Ashikaga becomes the first big Japanese bank to be nationalized since a financial crisis in 1997-98 when the government took control of Long-Term Credit Bank and Nippon Credit -- both of which were later sold to U.S. investment funds. Analysts had said the big question was not whether the government would take action but what method it would use -- the main choices being injecting funds into the bank to beef up its capital or, more drastically, putting it under state control. The public fund injection is the third for Ashikaga. The bank received 135 billion yen in taxpayer funds in 1998-99. The Bank of Japan said it would make special loans to Ashikaga to ensure there was no liquidity shortage, and BOJ Governor Toshihiko Fukui said he saw no major economic damage or impact on other regional banks from Ashikaga's nationalization. "As long as it is carried out smoothly, I do not see major damage to the regional economy, and thus the Japanese economy as a whole," he told a news conference. Financial Services Minister Heizo Takenaka, who said all other banks had met capital adequacy requirements in the latest reporting period, said Ashikaga's management would be replaced. Taking control of Ashikaga -- just an eighth the size of Resona but larger than Mellon Financial Corp of the United States -- indicates the government is at last taking a step toward addressing the problems of Japan's regional banks. Authorities are under increasing pressure to return banks to health before a planned end to blanket guarantees on deposits scheduled for March 2005, after which deposits are expected to shift from weak banks to healthier ones. Many of Japan's 118 regional banks are in worse shape than bigger lenders as they have fallen behind in cleaning up bad loans and strengthening their capital bases. As of March, Japan's top seven banks held a total of about 20 trillion yen ($183 billion) in bad loans, compared with about 15 trillion for the regionals, out of a total 44.5 trillion of bad loans in the entire banking system. Because of the deteriorating situation, the FSA aims to introduce rules to make it easier to inject funds into banks. At the end of September, Ashikaga had assets of 4.96 trillion yen ($45.46 billion), down from 5.27 trillion yen at end-March. It had negative capital of 108.1 billion yen, worsening from 23.3 billion yen at end-March. Its liabilities exceeded assets by 102.3 billion yen at the end of September. Shares in Ashikaga closed on Friday at a record low 81 yen, down 23.58 percent. (Additional reporting by Shinichi Kishima)

To: TobagoJack who wrote (42167)	11/29/2003 10:38:18 PM
From: Joe S Pack	Read Replies (2) \| Respond to of 74559

Jay, << Hello Pezz, You tended to, or at least seemed to, deliberately ignore the macro and devote much of your SI time to the here-and-now next trade. This has served you well (and me:0), especially since the officialdom has been hell-bent on releasing the liquidity deluge to float all ships, even the Amazons and United Airlines, and others with great big gashes in them. Investment and speculation in 2003 was easy , in hindsight. It was as easy as 1999, whereby one merely needed to buy something, anything, whether tech, emerging market, energy, or commodity, real estate or bonds, or near-money gold or further away non-USD cash, and they all went up. Easy money tends to have that effect:0) .. >>>> Message 19545992 Trade Barriers and the Dollar Cumberland Advisors, Inc. (A Subsidiary of Millennium Bank, Malvern, PA.) 614 Landis Ave. Vineland NJ 08360-8007 (Tel) (800) 257-7013 NOVEMBER 24 - The announced import restraints on Chinese-made lingerie will not create one single new job in the U.S. nor will it dramatically impact our payment imbalances. Less than half of 1% of America's imports from China are covered. Substitutions from other countries are easily arranged. It may raise prices slightly in the ladies departments of the major retailers like Wal-Mart. So why did the Bush Administration engage in what Barron's Alan Abelson called the "brouhaha over bras" or "brahaha?" There is a lot of history which proves that trade barriers raise prices for consumers, lessen efficiencies, impair business profits, invite retaliation and eventually cost jobs. There is no long term history anywhere which proves the opposite. Trade barriers may be arguable if they involve sensitive items needed for national defense. When that happens, we pay the higher cost in order to keep a secure production facility within our country for times of war. But Chinese lingerie? Really! This is not about textile imports. It's all about currency and the Bush administration's weak dollar policy. Remember the old adage: "be careful what you ask for." Bush's weak dollar policy is destined to succeed. We may not like all of the consequences. In time and on their own timetable, the Chinese will revalue their currency out of economic necessity, not because of pressure from China bashing. China's economy is steaming and inflating. That's why they will revalue the Renminbi. Estimates range from a doubling against the dollar on the high end to up 30% or so on the low end. No one expects the dollar to strengthen against the Renminbi. Few expect the dollar to strengthen against any of the world's hard currencies. The real question is by how much will it weaken. And will it be orderly? We think not. By the way, in 2004 we expect the euro to breach 1.25, a new all-time high against the dollar. That will be a 50% reversal in value in only a few short years. Why shouldn't the dollar weaken? America is keeping its short-term interest rate below the inflation rate by printing money and providing it in unlimited quantity. When the cost of money (1% interest rate) is below the inflation rate (2%) the use of the money is free. In fact, today it is subsidized by the 1% difference. We are also running a current account deficit of about 5% of our GDP; it is still rising. We have zero net national savings because of the federal deficit; that is not likely to change. With facts like these, why would anyone want the greenback? In addition our federal agency paper is under political attack. Fannie Mae and Freddie Mac are constantly in the news. Restatements of earnings even when positive are destabilizing and hurt credibility. They're seen as additive to the market volatility of federal agency paper. We have entered the era when all Government Sponsored Enterprises have a political sword over their heads. Foreigners presently hold more federal agency paper than treasuries. In the latest reports we have started to see net selling. Why shouldn't they sell? Wouldn't you? U.S. policy is diminishing the outlook for the U.S. dollar and for our ability to borrow more dollars at these present low interest rates. Since that policy is not about to change, we will have to pay more to keep attracting new dollars. Our fear is that this will not be orderly; instead, it may become a cascade, which will shock the bond markets. One analyst describes the bond market as a "coiled spring" (Jonathan Fuerbringer, Sunday's NY Times Business Section). We agree. Cumberland's volatility studies now show that bonds have become more volatile than stocks. In technical terms this prolonged period of low interest rates has increased the duration of the entire bond class because of the compression of yields. By definition that means higher risk to the market price. We expect bonds to sell off sharply and yields to rise quickly when the eventual turning point arrives. There may not be time to gradually realign a portfolio. That means investors have two choices. They can stay short and defensive to wait it out. This requires discipline. It means not chasing higher yields by going longer on the yield curve or down to lower credit quality. Or investors can chase the higher yields now and try to be nimble and trade out of them before the inevitable higher rates arrive. To do that you need to be able to read tomorrow's newspaper today. -- David R. Kotok

To: TobagoJack who wrote (42167)	11/30/2003 3:02:40 AM
From: pezz	Read Replies (1) \| Respond to of 74559

<<You tended to, or at least seemed to, deliberately ignore the macro>> Yes indeedy...As is the custom of one who prides himself a stock picker and is unsure of what the macro brings . I'm up at least 150% since January 1 while being in cash on average to the tune on about 25% to 30%...Now I do not deny that I had the wind at my back all year...But I don't think it wuz quite as easy as you make it appear. As to 1999 I have said this before more stocks on the NASDAQ as a whole closed down for the year than up ...Having said that I of course recognize that the index's went through the roof. They were packed with high flying large Cap stuff. When you look at the whole NAZ and judge by number and not capitalization you see mostly small stocks....I lost big time in 99... << you got into the Newmont Mining trade in a hurry,...your action was a result of a blend of motivations.>> It seemed to me that this wuz a natural trade as you would say but not entirely for the same reasons you generally espouse. Ya see I saw that the dollar wuz going down and every nation wanted their currency down ...OK so far we were together .But the stock mkt wuz goin up despite of itall..... Gold to me seems an insurance against TEO but without a premium!...I noticed NEM went up with gold and down less than gold...The 99 CSCO of gold stocks..A one year + option on NEM seemed the logical choice to play a continuation of the trend and Gold had just fallen 6 or 7 bucks that day to a level that seemed attractive so why would I wait? ....OK I wuz lucky... I can't make macro predictions with any conviction becauz I just think there are to many variables. Your list of dangers could happen...or not.Or another list as yet unforseen could happen ..or not..Or a list of good things could happen or not. <<Can we simply muddle through? Sure we can, until we cannot ;0)>> Well this says it all....I just haven't a clue when "we cannot" is....So in the meantime currently with about 23% cash and about 10% gold I continue long small caps which are leading the mkts onward and upward. Hoping that gold and cash will keep me away from the shopping cart should the music stop.I guess this means that I think that maybe we will see 2004 to be more of the same...But I may change my mind tomorrow.

To: TobagoJack who wrote (42167)	11/30/2003 4:17:38 AM
From: Seeker of Truth	Read Replies (2) \| Respond to of 74559

Hello Jay, Your three categories of investment don't include China stocks outside of oils and the coal one. They also don't include India stocks. I think the massive reassignment of manufacturing and clerical operations to low energy consumption countries can be looked on as a necessary saving of energy. Energy saving has to be a big winner. But maybe energy resources are a still bigger one? I think usually this will turn out to be so but the energy saving in moving operations to a poor but expert country is so great that that category deserves a place in one's portfolio alongside of direct ownership of energy resources. Chugs, Malcolm