[ohanian]

Battle to Sink the Yen! Japs 1 Gaijin 0

http://quote.bloomberg.com/apps/news?pi ... vw.fdU5eWc

July 6 (Bloomberg) -- Yen sales by Japanese mom and pop investors this week exceeded professional traders' bets against the currency on the Chicago Mercantile Exchange.

Net short positions on the yen against the dollar, or wagers Japan's currency will fall, reached $1.1 billion among traders using borrowed funds on July 4, according to the Tokyo International Financial Futures Exchange. Based on estimates of the exchange's market share, the total position of Japanese individual investors is about $19.15 billion, compared with $19.07 billion of bets by traders on Chicago's market.

[pup55]

$this->bbcode_second_pass_quote('', 'T')he gnomes of Zurich were accused in their day of destabilizing markets. The housewives of Tokyo are apparently acting to stabilize them.''

[FoxV]

Isn't when the average Joes get involve a sign that the end is near.

$CND reached a new high yesterday. I wouldn't bet on a strong USD.

Especially considering that the rest of the world is raising rates and the US FED can't because their economy would go into free fall then. Also with the UK raising rates to 5.75% now the Yen/Pound becomes a better bet than Yen/USD

[MrBill]

Well, to be honest, at some point the Europeans are going to get mighty cranky about a weak yen that is eroding Europe's trade surplus (ex-Germany $227.3 bio it would be a deficit of minus $218.7 bio). No currency manipulation there!

Plus I do not really understand your headline - Japs 1: Gaijin 0?

Who are the losers here? Economic stagnation since more than a decade, and a weak yen that makes imports more expensive, and so therefore undermines purchasing power for the Japanese?

Plus, despite a yen that is 40% undervalued and super low interest rates, thus helping Japanese manufacturing and exports, the Japanese still run a budget deficit of -4.4% of GDP? And have the highest debt to GDP (158%) of any industrialized country?

And all those aging Japanese, in one of the most rapidly aging populations in the world, can invest their life-savings at 1.01% in the 10-year JGB, which roughly means their savings will double every 71-years?

Or, of course, they can take their luck speculating on foreign exchange markets? Just what mom & pop should be doing. What happens when that yen carry trade unwinds, eh? Oops.

I think the reality is that there are two Japans. One has the world beating companies like Toyota that are export orientated.

And the other is an inward looking navel gazer scared of change and trying desperately to save face as epimtomized by the LDP and MITI.

[ohanian]

$this->bbcode_second_pass_quote('MrBill', '
')Plus I do not really understand your headline - Japs 1: Gaijin 0?

Who are the losers here? Economic stagnation since more than a decade, and a weak yen that makes imports more expensive, and so therefore undermines purchasing power for the Japanese?

[Pretorian]

do you guys trade too? I almost went nuts yesterday with usd/jpy and aud/jpy

[MrBill]

Thanks for your clarification ohanian. I must of misunderstood your first post? Sorry.

RE trading yen

I traded foreign exchange for about 10-years at some of the biggest banks in America as a market maker.

Yen is a mug's game. It always trades on inside information. It is extremely technical in nature, but when the correction comes, and it will, you can bet the biggest Japanese banks and investors will be positioned ahead of it.

My ex-boss now works for a Japanese bank in London. I have made some good money trading on the back of his tips, but in the end I just gave it all back. Personally, I would not touch the yen. There are easier ways to lose money, like trading crude oil! ; - )

[ohanian]

$this->bbcode_second_pass_quote('MrBill', '
')Yen is a mug's game. It always trades on inside information. It is extremely technical in nature, but when the correction comes, and it will, you can bet the biggest Japanese banks and investors will be positioned ahead of it.

[MrBill]

Looking at EUR/JPY because I believe this move is driven by buying EUR/USD and selling JPY/USD I see an over-bought condition in the EUR/JPY at 168.60.

The last time I called for a top at 164.60 it dipped down to 161.50 afterwards. Not as much as I wanted or hoped for, but traders were quick to put the carry trades back on.

IF 168.60 is the top this week then it should do a minimum retracement to 164.40 (0.236R) if not 161.80 (0.382R) from the technicals.

At which point I have to say, big deal, it is still over-bought at that level with the yen at least 40% under-valued against the euro. It would therefore still be over-bought even if it dipped back to 150.75 from whence this latest rally started this year.

The Japanese have serious political problems at the moment, so I do not think the MOF or BOJ are going to let the yen strengthen too quickly. Mind you they cannot control the whole market, but they can certainly influence it. We will see when the next G7 meeting comes up whether the weakness of the yen is a talking point or not?

[pitzel]

Well its certainly never a good idea to bet against structurally sound economies with excellent fundamentals such as Japan.

Japan's interest rates are low for the exact reason that Japan doesn't need high interest rates to attract capital -- they have a savings and investment culture domestically which generates all the capital that is needed for domestic requirements.

Japan barely has a banking industry, and is one of the most efficient nations on earth in terms of the energy (fossil fuel) inputs per unit of GDP. Japan has a vibrant high-end manufacturing industry that will not be easily displaced to China. Japan made the investment in alternative energy infrastructure years ago, so they aren't facing a massive energy crunch like the United States is today.

Japan's monetary base has only grown by around 6% in the past year, contrasted with double-digit increases in practically every other industrialized nation. Japanese corporate profits are growing at double digit rates, and the stock market is very much undervalued. Japanese savers receive very high real rates of interest since their money isn't being inflated away. Imports aren't a huge issue because Japan has a strong domestic production economy supplying much of their own needs.

Japanese housewives are insane for speculating against their own country, much like many Canadians, upon later reflection, were insane speculating against their own currency in the dying days of the commodities bear market in the late 90s/2000. The proliferation of foreign investment accounts, and the fact that the newspapers claim 'everyone is betting against the Yen' is a classic contrarian signal that its now time to buy the Yen for good returns.

I suspect that the Yen is 30-40% undervalued based on the trade surplus and the current account surplus of Japan, and the high national savings rate. I further suspect that the Nikkei-225 index, based on its low P/E ratio, is a further 20-30% undervalued. An investor in Japan, buying Yen, selling US dollars to buy a N225 holding, should expect 40-60% gains in the coming years as Japanese markets and the Yen return to their fundamental valuations.

BTW, 1% on a 10-year JGB is actually very good for Japanese investors, as the Yen is appreciating in terms of domestic purchasing power. Its almost like recieiving a 1.5% real (after inflation, after-tax) return. Not a snowball's chance in hell US investors are receiving anywhere near that sort of interest rate, once inflation and taxes have been subtracted from the returns in US treasuries.

[airstrip1]

Iran Asks Japan to Pay Yen for Oil, Start Immediately (Update3)

By Megumi Yamanaka
Enlarge Image
The Japanese oil tanker Mogamigawa

July 13 (Bloomberg) -- Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran's central bank said it is reducing holdings of the U.S. dollar.

Iran wants yen-based transactions ``for any/all of your forthcoming Iranian crude oil liftings,'' according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments ``effective immediately,'' according to the letter, dated July 10 and obtained by Bloomberg News.

The yen rose on speculation for an increase in demand for the currency, the result of Japan's annual 1.24 trillion yen ($10.1 billion) of oil imports from Iran. Central bankers in Venezuela, Indonesia and the United Arab Emirates have said they will invest less of their reserves in dollar assets because of the weakening currency.

Boomberg

Games not over yet.

[i]

[MrBill]

Thanks for your comments. I have added my comments. Thanks.
$this->bbcode_second_pass_quote('pitzel', 'W')ell its certainly never a good idea to bet against structurally sound economies with excellent fundamentals such as Japan.

MrBill writes:
$this->bbcode_second_pass_quote('', 'J')apan has been in an on again/off again low, slow growth, recession path for 15-years now, since its real-estate bubble burst.

I refered to a two-speed economy. World beating exporters like Toyota. And hide bound domestic laggards. I stand by that assessement.

[MrBill]

Pitzel, according to this fund manager's survey, your outlook on Japanese equities and yen appreciation is where these managers see the best potential gains in the next 12-months.

$this->bbcode_second_pass_quote('', 'M')anagers raise Japanese equity exposure
The survey said that asset allocators raised their exposure to global emerging market equities and to Japanese equities over the month.

"Interest in Japanese equities picked up...helped by the undervaluation of the yen. Japan as taken over from the euro zone as the region with the most undervalued equity market," the survey said.

Japan is most undervalued equity market, according to a net 22% of managers, up from 10% taking this view a month ago. The eurozone is the next most undervalued market, with 11% of managers taking this view, down from 16% last month.

A net 23% of managers said that Japan is the stock region they would most like to overweight, up from 12% a month ago, while a net 20% said that they would like to underweight the U.S. on a twelve month view, down from 21% last month.

U.S. shares are still the most overvalued, according to a net 17% of managers, up from 15% holding this stance last month.
On currency trends, a net 30% of managers believe that the yen will appreciate the most in the next twelve months, up from 23% a month ago. Around 24% believe the dollar will depreciate the most, up from 9% last month.

The dollar has recently sunk to lows against rivals ranging from the euro to the Thai baht.

[MrBill]

It seems like Honda's lack of Formula I success despite deep pockets and large outlays are not its only problem in The Land of the Setting Consumer?

$this->bbcode_second_pass_quote('', ' ')If Honda's latest plans are anything to go by, Japanese carmakers are not about to pull the brakes on their overseas expansion.

Having established themselves in the US - now a cash cow for Honda - Japanese carmakers are, not surprisingly, building up their presence in developing markets.

The driving force is a moribund domestic market. Car sales in Japan have slumped to a level not seen in 30 years. In the first half of this year, sales of vehicles, excluding minivehicles with engine sizes of 660cc and under, fell 10.5 per cent to 1.78m.

The situation is likely to get worse before it gets better. Not only is the Japanese population shrinking at an alarming rate, growing income disparity means that unlike in the days when practically all Japanese considered themselves middle class, there are more people in only sporadic employment, who cannot afford to buy a car. And Japanese young people are less inclined to set aside their savings for a down payment on a car than to spend what cash they have on more easily accessible goods, such as mobile phones.

As demand remains focused on minivehicles, Honda hopes to capture what demand still remains by beefing up its offerings in the segment.

Honda is keenly aware that developing markets offer the best promise for future growth. Flush with funds, Honda is building capacity in countries ranging from Turkey to Vietnam in what is likely to be just the first phase of an extended overseas push.

[Roccland]

YEN BREAKS SUPPORT....!!!!!!

LINK

Expect gold to soar!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[MrBill]

$this->bbcode_second_pass_quote('Roccland', 'Y')EN BREAKS SUPPORT....!!!!!!

LINK

Expect gold to soar!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!