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

To: John Pitera who wrote (10406)	10/24/2008 12:46:40 AM
From: John Pitera	1 Recommendation Respond to of 33421

Also posted on MISH's THREAD-- Hi AJ, I'm not in the least surprised to see the Nikkei and it's EWJ etf make new lows for 2008. The JPY has been the relative anchor currency that has helped to counterbalance all the massive volatility the the USD has witnessed against the other global currencies. Looking at the EWJ (Japanese ETD) on a daily chart going back to 1996 both the normal MACD and on Balance volume caculations are at the lowest level since the ETF was launched. It's been in a free fall along with so many other assets, and asset classes. basis the Nikkei the 2003 low was 7603..... based on the massive momentum of this decline since we broke 12500 on the Nikkei, tells me we will not only retest the 7603 low, but make a new lower low for the macro cycle that has played out since the high at 39000 and change on Dec 31st 1989. I feel compelled to issue a "mea culpa" as I was really expecting a better relative performance from Japanese equities over this first decade of the 21st century. We have witnessed some nice cyclical bull markets, but in the final analysis we saw much more firepower from the emerging markets in China, India, Brazil... .... and of course our own turbocharged performance in finance and real estate related issues in the good old USA from 2003 to 2007. For the elliott wavers in the audience the wild exurberence of these finance, real estate et al.... sectors created this massive "B" wave bubble from 2003 until mid 2007..... It was classic in the creating a mania that dwarfed the mania of B2B, telcom, dotcom and Genome stocks that witnessed a massive super nova collapse in 2000-2001. Thus the "C" wave Elliott collapses always have a much more negtive and dire feel to them. Their is the change from an A wave decline that this is a correction..... It morphs into a much more negative psychology that this is now a firmly cemented trend that will go one for years and deteriorate. This "C" wave collapse is of such a significant degree that not only are we witnessing a more complete revulsion of equities and other financially engineered products. We are also experiencing a complete and total revulsion with Free Markets/ Capitalism.... Golden Parachutes and all of these other manifestations of the Financial and Banking Industry. This shall lead to a world that views the way it should be governed that will be the biggest leap since the WWI-WWII psychology. I truly and honestly do not know how these aspects of this dislocation will play out. Maybe something to take consider on the positive side of the ledger is the Indian nation launching a mission to the moon.... progess continues even under the duress of the imbalances of Mass Psychology. John

To: John Pitera who wrote (10406)	11/6/2008 10:53:19 PM
From: John Pitera	Respond to of 33421

Companies with Currency FASB 133 Blow-ups---Aracruz to Unwind Bad Bets on Currency By JOHN LYONS Nov. 5, 2008 SÃO PAULO, Brazil -- Brazilian pulp giant Aracruz Celulose SA, which owes more than $2 billion to a group of banks due to soured currency bets, reached a deal that will let it pay off its losses over a number of years. The deal, between Aracruz and a handful of banks, saves the company from a potentially crippling payment, but will leave it with a debt load for years. The deal's hefty price tag underscored the amount of damage suffered by some Latin American companies from *sharp moves in global currencies during the financial crisis. Many of these companies bet that the commodity boom would continue to drive up currencies like the Brazilian real against the dollar. But Latin American currencies crumbled in recent months as investors cut risk and fled currencies of commodity producers. The losses are concentrated in Brazil and Mexico. In Brazil, the list includes industrial conglomerate Grupo Votorantim and poultry company Sadia. In Mexico, cement maker Cemex SAB and tortilla maker Gruma announced losses. The country's third biggest retailer, Controladora Comercial Mexicana, filed for bankruptcy proceedings. It could take five to 10 years for Arazcruz to pay back the $2.13 billion* it owes to the banks, said Itau Securities analyst Marcelo W. de Brisac. Paying off the debt will make it harder for the company to fund investments, limiting future growth. Terms of the repayment will be determined by the end of the month. "All growth plans are now out the window," said Mr. de Brisac. The company's debt service payments will equal bout 40% of its earnings before interest, taxes and amortizations, he estimates. The losses have put a snag in other arrangements. Aracruz was being acquired by Grupo Votorantim when it disclosed the losses. The deal is on hold and it's not clear when it will be revived. Aracruz's arrangement with its banks, released by the company in a statement to regulators, may show that the firms hit by the losses are resolving their problems in an orderly fashion. Aracruz's share price, which had fallen some 70% since September on concerns about the derivatives losses, rose Tuesday. Aracruz's deal shows that some banks will be forced to deploy their own capital to finance repayment of currency losses. Those fears were behind Monday's merger of Itaú Holding Financeira SA and União de Bancos Brasileiros SA. Brazilian bank shares rallied for a second day Tuesday on hopes that the consolidation of banks will continue. Write to John Lyons at john.lyons@wsj.com