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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (61511)	2/25/2010 6:47:13 PM
From: TobagoJack	1 Recommendation Read Replies (1) \| Respond to of 217917

do not fret, gold is doing well, and causing no sleeplessness, and up so much since i have been engaging with it, and really hardly getting started (in that you are correct ;0) i like slow and steady, year after year, as it saves on effort. in the mean time, just in in-tray, per GREED fear · Japanese specialists are focusing on the significant cost cutting that has been undertaken by corporate Japan. This means there will be dramatic operational gearing if the US economic recovery proves to be healthier than GREED & fear expects, most particularly as rising US interest rates will lead to the much anticipated weakening in the yen. · Still, GREED & fear’s view remains that the Fed will not raise the federal funds rate in 2010. If this turns out to be true, the yen is only likely to weaken significantly if the Bank of Japan takes aggressive action on quantitative easing, inflation targeting and the like. Yet for now all the signals from the BoJ remain that it would prefer to remain passive. · GREED & fear’s view is that a move in the yen back to the Y85/US$ level would probably serve as the necessary catalyst for more aggressive BoJ action. Still the BOJ is sceptical as a result of its own experience as to whether quantitative easing actually works, given that the fundamental problem is less the lack of supply of credit than the lack of demand for credit. · As Finance Minster Naoto Kan calls for the BOJ to do more to overcome deflation, the view from the central bank in response is that the Japanese government should do more to gets its fiscal house in order. This is understandable given the scary rise in JGB issuance this fiscal year. Investors should also be aware that the political position of the present DPJ Government is not as strong as it was. · It is now less clear than it used to be that the DPJ will secure the necessary majority in the Upper House election due to be held in July which would allow it to rule most effectively. This in turn has raised the critical issue of whether DPJ Secretary General Ichiro Ozawa has become an electoral liability. · Japan is still groping its way towards a long overdue political realignment, where voters can finally choose between parties advocating clearly alternative policies. This long overdue political realignment is taking an agonizingly long time, while it cannot be assumed that the ultimate outcome will be in a pro-reform pro-capitalist direction. · The deflationary pressures continue to intensify in Japan. There also remains a lack of a domestic demand story with all hopes focused on reviving external demand. GREED & fear continues to advise dedicated Japanese investors to orientate their portfolios around those sectors and companies whose revenues and future prospects are geared to the quality growth story in the world, which remains Asia and emerging markets. · The other interesting thematic area of the Japanese stock market is where companies have built successful businesses in the now long prevailing deflationary environment, and where those business models are potentially scaleable in a Western world which in GREED & fear’s view is also becoming increasingly deflationary. · Mitsubishi Heavy, MUFG and Japan Retail Fund will be removed from the Japanese long-only portfolio, while the investment in Sumitomo Metal Mining will be shaved by 1ppt. These will be replaced by a 3ppt investment each in Japan Tobacco, personal care company Unicharm, car components maker Toyota Boshoku and Yahoo Japan. · The best investment case for Japanese banks is the relative-return argument that they have gone down so far that the sector is long overdue for a period of outperformance. Still there are a lack of bottom-up catalysts to justify owning Japanese banks on absolute-return grounds. Bank lending continues to decline while net interest margins remain under pressure. It is also a negative that the average foreign shareholding in a megabank is still around 30%. · While GREED & fear is not expecting Japan’s alarming fiscal deterioration to blow up in the short term, such an outcome is quite plausible on a five-year view. The cultural realities of Japan suggest that this will be a binary event driven by crowd psychology. Either everybody in Japan will continue to be willing to own JGBs or no one will save the Bank of Japan. If and when the latter outcome happens, Japan will move very quickly from deflation to hyperinflation and the yen will collapse. · The core reason for the continuing deflationary backdrop in the indebted West is the continuing deleveraging of the private sector. With US bank lending still weak, this raises the topical issue of securitisation and whether the shadow banking system can be brought back to life. GREED & fear remains highly sceptical. · There is a lack of any convincing revival so far in the demand for securitisation products apart from forced buyers acting under government influence. There is also continuing forced selling of securitised assets by distressed private sector investors. · GREED & fear continues to believe that the best possible outcome for the US housing market is what is suggested by the house price futures market. That is nearly no home price appreciation by the end of 2013. But such a stable outcome assumes continuing successful government intervention to stabilise an oversupplied market thereby preventing a natural market clearing bottom which could lead to a genuine recovery in prices. · Investors should be wary of false recoveries in areas such as Britain where mortgage borrowers continue to be seduced by low nominal mortgage rates. British house buyers fail to understand the massive deflationary risk posed by the British economy’s massive level of private sector debt. · Investors should refocus on the most likely beneficiary of continuing ultra low short term interest rates in the West. That is the Asian and emerging market asset reflation story. CLSA CLEAN & GREEN: Please consider our environment before printing this email. The content of this communication is subject to CLSA Legal and Regulatory Notices These can be viewed at clsa.com or sent to you upon request.