Tag Archives: Japan
Posted on 01. Feb, 2012 by Wilensky.
Remember when China, producer of 95% of all the world’s rare earths, sent shockwaves through the rare earth markets by announcing a 40% reduction in rare earth production (seen here), and further stoked the fire by “mysteriously halting” all exports of the commodity (seen here) in a retaliatory effort against Japan? While China’s grasp strengthens while Western economies flail, Malaysia sees opportunity in offering some relief from restrictions by the erratic and opaque Chinese government. According to the NYTimes, regulators have granted an initial operating license to an immense refinery specializing in rare earth production. Although this is just the first of many hurtles, the granting of the operating license is one step closer to the expected opening of the facility later this year.. and one small step away from the clutches of China’s monopolistic industry.
Posted on 13. Jan, 2012 by Ron Rowland.
Guest post: Ron Rowland
One of the best ways to make money in ETFs is to not lose money. I know it sounds obvious, but I can assure you that many people don’t get this key point. So if I can help you do that, then I count it as a success. And today I’ll talk about an ETF category I think you should avoid in 2012: Japan.
What’s Wrong with Japan?
I’ve been to Japan many times. I love the country and the people. Yet I have to tell you that now is not the time to invest in Japanese stock ETFs. Yes, I know the Nikkei Dow looks oversold, but it’s looked that way for years. As I’ve explained before, calling a bottom is tough. And I don’t think Japan is there yet. Here are six reasons why:
#1 — Strong Yen
The yen was very strong in 2011 … which is bad news because it makes Japan’s exports relatively more expensive. And exports are a BIG part of the national economy for Japan.
The authorities are well aware of this, of course, but there isn’t much they can do about it. The Bank of Japan intervened multiple times last year. In every case, the impact of their actions was gone within a few days.
#2 — European Recession
A huge chunk of Japanese exports go to Europe. As you’ve surely noticed, the euro zone is having a few problems. A severe recession — or at best a few years of low growth — seem likely for 2012 and beyond.
If Europeans have no money to spend, their demand for imports (from Japan and elsewhere) is going to plummet. This is another bad sign for Japan.
#3 — Hungry Competitors
Japan reached economic success by beating the developed countries in cheap, efficient manufacturing. Now they have competitors: Taiwan, South Korea, Brazil, India … and of course China.
The challenge for Japan is that all these other countries can do the very same things that put Japan on the map. And in some cases, they can do it better. Nations like Brazil have other advantages, too, like better access to natural resources and geographical proximity to key markets.
#4 — Aging Population
Japan is, on average, one of the oldest nations on the planet. Furthermore, the relatively small number of young adults has a very low birth rate.
The resulting imbalance is making it harder and harder for Japanese industry to keep growing. Older workers hang on to their jobs for dear life while younger people have no way to gain skills. We’re seeing a similar pattern here in the U.S., but in Japan it’s a much bigger problem.
#5 — Massive Government Debt
Japan’s national debt is projected to surpass 1 quadrillion yen in 2012. A big cause is the population imbalance noted above. All those older people require heavy spending on health care and pensions.
To stay afloat, Japan will almost certainly need to raise taxes on both individuals and businesses. And higher taxes won’t make it any easier to create economic growth.
#6 — Political Instability
Japan’s parliamentary government used to work pretty well. Now it’s turning almost as dysfunctional as Italy and Greece.
Consider this: Japan has had six different prime ministers since 2006. The current occupant, Yoshihiko Noda, took office in September 2011 and is already under fire.
The real problem isn’t the government; it’s the voters and their unrealistic expectations. Changing leadership is just a symptom.
Posted on 30. Aug, 2011 by Maxwell Leary.
Aug. 30 (Bloomberg) — Japan’s jobless rate rose for a second
month and retail sales dropped, underscoring the challenge for incoming Prime
Minister Yoshihiko Noda in securing Japan’s recovery from the March 11
The unemployment rate rose to 4.7 percent in July as payrolls
fell by 40,000 from a month earlier, the statistics bureau said today in Tokyo.
Retail sales slid a seasonally adjusted 0.3 percent from June, a Trade Ministry
Noda, who was elected premier by the lower house of parliament
today, inherits a recovery under threat from an advancing yen and a global
slowdown. A weakening economy will complicate his task of funding the next
reconstruction package, according to economist Yoshimasa Maruyama.
“Today’s reports show Japan’s recovery is leveling off in the
middle of the post-earthquake rebound,” said Maruyama, a senior economist at
Itochu Corp. in Tokyo. “Noda wants to raise taxes next fiscal year but that may
have to be postponed. The economy won’t be strong enough.”
Full article available @:
Posted on 24. Aug, 2011 by Maxwell Leary.
(Reuters) – Moody’s Investors Service cut its rating on Japan’s government debt by one notch to Aa3 on Wednesday, blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies.
Japan is preparing to elect its sixth leader in five years to replace unpopular Prime Minister Naoto Kan, under fire for his handling of the response to a March tsunami and subsequent radiation crisis at a crippled nuclear power plant.
The downgrade, while not out of the blue, served as another reminder of the debt burdens that nearly all of the world’s major advanced economies shoulder, even as policymakers struggle to agree on ways to stimulate sub-par growth without massive new spending.
The United States lost its top-tier AAA rating from Standard & Poor’s earlier this month, and Moody’s warned in June that it may downgrade Italy as Europe’s sovereign debt crisis festers.
Moody’s new rating on Japan’s debt is three notches below coveted AAA status, which Tokyo lost in 1998, but is still classified as high grade. Japan is now the same level as China, which surpassed it last year to become the world’s second-largest economy, and one notch below Italy and Spain.
“Over the past five years, frequent changes in (Japan’s) administrations have prevented the government from implementing long-term economic and fiscal strategies into effective and durable policies,” Moody’s said.
Moody’s had warned in May that it might downgrade Japan’s Aa2 rating due to heightened concerns about faltering growth prospects and a weak policy response to rein in bulging public debt, already twice the size of its $5 trillion economy.
Full article available @:
Posted on 30. May, 2011 by Darrel Whitten.
If You Buy Japan Recovery, You Need One Megabank
May 30, 2011
As outlined last week, global fund managers continue to be constructive about Japanese equities, despite the lackluster movement in Tokyo stocks, the continued strength of JPY/USD since the Tohoku Disaster on March 11, 2011 and the greater-than-expected decline in Japan’s economy. Tokyo Stock Exchange data show no abatement of record net buying of Japanese equities over the past couple of weeks, particularly from North American investors.
The bear case against Japan is extensive, well-chronicled and to many, persuasive. But value investors say the macro story obscures the many individual company opportunities that fit classic value investor criteria. Japanese equities are attractive to such investors because, a) valuations for Japanese securities are on the whole very cheap. While Japan may be a classic value trap, the yen is near its strongest level against the dollar since 1995. Then Japanese stocks staged a strong rally when JPY rolled over. b) More Japanese companies are recognizing shareholders as important stakeholders in their businesses by sharing profits through increased dividends and stock repurchases. c) Japanese companies are deriving new growth from some of the world’s fastest-growing economies in East Asia.
We have been consistently bearish on Japanese megabanks as chronic destroyers of shareholder capi
Posted on 01. Apr, 2011 by David Spinowitz.
It would be great if I’m wrong but chances are we’ll see prices for crude hit $140 before we see $80 barrels again….After hovering around $103 a barrel for the past week, light, sweet crude had jumped to over $107 a barrel on the Nymex (and Brent over $117 a barrel). Let’s take a step back and try to understand why this is happening……
The situation in Libya is looking like a shit-show. Pro-Gadhafi forces have pushed back rebel forces, in spite of the coalition-imposed no-fly zone. Plus the reports of British Ops & the CIA tearing it up in Libya, doesn’t make matters any better. And let’s not forget about the geopolitical unrest in Syria, Yemen and Bahrain.
The situation in Libya raises a broader, far more concerning set of questions. If it can happen in Libya, why not in Saudi Arabia, where the government is still essentially tribal in nature and will not be winning any prizes for their human rights record anytime soon. Women are still not allowed to drive. Take their 12 million barrels/day off the market, even for a few days, and the geopolitical implications are large, very large (despite the fact that the US imports only 2 million barrels a day from the mid east).Having said that, Canada is now our largest foreign supplier, followed by Mexico and Venezuela (I’ll save my opinions on Chavez for a later date). But oil is a globally traded commodity, and if you prick the supply line in one place we all have to pay. Remove Saudi Arabia from the picture, and the results could be catastrophic, for China first, but for ourselves as well.
While unlikely, if the US keeps demand relatively flat through the use of new alternatives (which there are a great deal of), new conservation efforts and a growing economy, China promises to eat up all of this increase. That my friends, is when the sushi hits the fan. I think oil could easily hit $300/barrel by 2020. (more…)
Posted on 31. Mar, 2011 by David Spinowitz.
Status of Fukushima Dai-ichi from Japan Atomic Industrial Forum on 30th March. Significance: Red = Severe (need immediate action); Yellow = High; Green = low.
Source: The Oil Drum
Posted on 16. Mar, 2011 by David Spinowitz.
Before the discovery of Australia, people in the Old World were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence. The sighting of the first black swan might have been an interesting surprise for a few ornithologists (and others extremely concerned with the coloring of birds), but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single (and, I am told, quite ugly) black bird. – Nassim Taleb, The Black Swan: The Impact of the Highly Improbable
The earthquake, tsunami and current nuclear crisis in Japan, as well as the current geopolitical unrest in the Middle East challenge the concept of market stability. Black Swan events have tested the limits of the financial markets and banking systems for decades (some might recall the “Tulip Mania” bubble in the early 1600’s). Reflect on the following list, via Doug Kass of those once in a lifetime events that have occured over the past decade:
- the Sept. 11, 2001, attacks on the World Trade Center and Pentagon;
- a 75% decline in the Nasdaq;