Archive for March, 2013

Japan’s Nikkei Posts Best Back-to-Back Quarter Since 1972

Could this be a start of another Japanese boom ?

Looking at the graph below you can see last time the Nikkei went up by a factor of 8!!
Garph link

Sentiment has changed here over the coming months in my 8 year time here I have never seen it so positive!

Abenomics is the key , lets make sure he keeps up the good work .

Tony Evans

Japan’s Nikkei 225 Stock Average (NKY) rose today, capping its best back-to-back quarterly performance since 1972, on optimism policy makers will stimulate the economy and as U.S. data boosted optimism about global growth.
The Nikkei 225 rose 0.5 percent to 12,397.91 at the close of trading in Tokyo. The measure closed 19 percent higher this quarter, extending the 17 percent increase in the previous quarter. That’s the best two-quarter performance since December 1972, when the measure rose 37 percent.

Japan’s Nikkei Posts Best Back-to-Back Quarter Since 1972

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Be who you are and say what you feel, because those who mind don’t matter and those who matter don’t mind.- Dr Seuss

Be who you are and say what you feel, because those who mind don’t matter and those who matter don’t mind.

Dr Seuss

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S&P Smashes through all time high

Confident High , Markets are BOOMING ! But is the market getting slightly ahead of itself ? GDP growth is slower than expected , unemployment still quiet high and personal/ public debt is still high .
My
Opinion on this is the markets are all driven by human emotion ( greed , fear ) at the moment everyone want to join the party ! I personally have started to take profit , profit is only profit if you have it in your pocket .

Lets see what the 2nd quarter has in stall for us

The below article was from

Tony Evans , Tokyo

S&P Smashes through all time high.

28 Mar, 2013

S&P Smashes through all time high

The S&P 500 smashed through a half-decade-old record as stocks continued their strong rally today.

The push to record territory came in mid-morning trading, as the S&P 500 broke past its previous record close of 1565.15 on Oct. 9, 2007.

The push to record territory came in mid-morning trading, as the S&P 500 broke past its previous record close of 1565.15 on Oct. 9, 2007.

The rally in stock prices has been fuelled by recent reports showing the U.S. economy is recovering, albeit at a sluggish pace. And investors have concluded that the financial markets aren’t immediately threatened by a debt crisis and recession in Europe or by fiscal dysfunction in Washington.

“Confidence is being restored, not just among investors but among businesses and consumers,” says Jason Ware, market strategist at Albion Financial Group in Salt Lake City, Utah. “They’re feeling better about the world, the economy and the market… 2008 and 2009 were pretty difficult, but we’ve come a long way.”

A major driver of the stock market in recent years has been multiple rounds of stimulus by the Federal Reserve and other central banks around the globe. The Fed has pumped billions into the economy, keeping interest rates near record lows. That in turn has made traditionally safe investments like bonds less attractive, pushing investors into riskier assets such as stocks.

If you wish to find out more, speak to a deVere Financial Adviser today.

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Re blogging & commenting @nigeljgreen -No Euro Bank is Safe Now

I read the below this morning and to me it just emphasized the rule ” risk reward ” for the interest you need to take into account there is a chance for loss .
All the bailed out banks/ country , one thing is always apparent before the crash these banks were offering higher interest than the counterpart , why ? As the market saw they were a higher risk , they appealed to human greed factor ,
My personal view is people need to relies risk & reward , sometimes you win and sometimes you loose , that’s capitalism .

At the moment it’s capitalism with government guarantee !!!

Lets go back to basics

Tony Evans

No Euro Bank Is Safe Now

MARCH 26, 2013
The rescue of Cyprus sets precedents for the euro zone that may stick in the memory of depositors and bondholders alike as investors debate who will next fall victim to the debt crisis. Under the terms of the agreement struck yesterday in Brussels, senior Cypriot bank bond holders will take losses and uninsured depositors will be largely wiped out.

The message that savers of all types can be coerced into helping a cash-strapped natio will make investors more fearful they’ll be targeted if Italy, Spain or even Greece again is next in line to need help. The risk is that bank runs and bond market selloffs become more likely the moment a country applies for a new rescue.

We now have a new type of rule and everyone within the euro zone has to sit down and see what that implies for their own finances.

Until now, euro region officials had left bank depositors and senior bondholders untouched as they tried to rescue the bloc’s struggling economies .

The Irish banking system collapsed partly because its government refused to renege on a guarantee to deposit holders made after Lehman Brothers Holdings Inc. collapsed.

The Cyprus crisis has opened up some precedents that will make investors more worried about how future euro zone crises will evolve.

They will swear black and blue that Cyprus is a unique case but so was Greece. I personally believe this crisis in particular has been handled badly and will cause problems in the next few months in many other countries.

Spain’s economy minister yesterday was keen to point out yesterday that a Cyprus-style bailout could not be extrapolated to any other country.
Does anyone believe him though ?
Investors should take advice from a financial advisor. There is potentially another crisis in Euro banks I believe.

Nigel Green deVere Group

Blog written 26th March

Manufacturing of latest technology to be shifted to America

A great piece on how hightech company are moving back to the USA.in my opinion this is no surprise as theft of Technology in the emerging market ,

Without patens and protection of them companies will loose huge amount of income ,

Re blogged from deVere Group
Tony Evans

Manufacturing of latest technology to be shifted to America.

Manufacturing of latest technology to be shifted to America

Big technology companies like Google and Apple are favouring the United States as their preferred location for manufacturing their million-dollar investments in cutting edge technology.

Earlier this week, Google announced that it will manufacture Project Glass, its futuristic digital eyewear in America – in a high-profile example of the return of electronics manufacturing to the US, according to the Financial Times.

Specifically, the headsets of the next generation wearable computing will be manufactured at a Foxconn plant in Santa Clara, California – making it the second product that we know Google has manufactured on US soil, Verge has revealed.

Google Glass is an ambitious gadget that has already sparked obsession amongst tech lovers. It features an inbuilt camera that is controlled by voice recognition software and can send photos and videos directly to the web, via a connected smartphone. It also carries a small screen above the wearer’s right eye that displays search results and other information.

The high cost and complexity of the project therefore made it much more practical to base manufacturing operations near Google’s Silicon Valley headquarters.

Furthermore, in December, Apple CEO Tim Cook pledged to invest $100 million in American manufacturing to build Mac computers there. The company said that it will work with partners, rather than do it themselves, and that the operations will include more than just final assembly, wrote.

Such decisions to manufacture in America will definitely set a smile on US President Barack Obama, as this would boost his drive to ensure that ‘the next revolution in manufacturing is Made in America’, as announced during his State of the Union address.

Quote – In order to be irreplaceable one must always be different.

Saw this yesterday and went what a cracking quote by an amazing lady ,

In order to be irreplaceable one must always be different.

Coco Chanel

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work hard in silence let success make the noise

How old school is that ?
Agreed

work hard in silence let success make the noise

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China’s growth could slow sharply by 2030 – Fed

Reading the below article and there’s one point that stuck with me , GDP is man made ! After living in Shanghai for a period I saw that a “great deal” of things are fake and it’s a given that the population is not correct as funding was based on population .I believe that 10/15% variable is conservative overstated .

But at the current rate China generates GDP growth in a week equivalent to Cyprus yearly GDP & 12.5 weeks GPP growth of Greece !!

China might be slowing but it’s still growing !

China's growth could slow sharply by 2030 – Fed.

China’s growth could slow sharply by 2030 – Fed

The US Federal Reserve believes that global economic trends might shift sharply by 2030, as China faces mounting headwinds – potentially forcing it to fade dramatically in the years ahead.

Declining productivity and an aging population could shrink the trend growth in China to around 6.5% by 2030, according to a new study. Moreover, if the current forces that are undermining economic activity combine in a worst-case scenario, the pace could fall to under 1%.

Notably, one of the Fed’s Senior Adviser wrote that GDP growth rate is the sum of the growth in employment and the growth in output per employee, and China faces challenges in both of these categories. Meanwhile, a US diplomatic cable recently released by Wikileaks has shown that Li Keqiang, China’s new premier, called the GDP figures ‘man-made’ and therefore unreliable as they underestimate inflation.

Chinese economic data is often questioned by sceptics who believe that government statisticians refine the numbers to make the Communist Party look like it’s bringing prosperity to its citizens.

Nonetheless, in the midst of the financial crisis, buoyant Chinese growth helped to support the global economy after recessions in the United States and Europe.

Economists commented that most investors would agree that the Chinese economy cannot maintain the extremely rapid growth rates it has seen over the past decades. The question is thus not whether the Chinese economy will slow but by when and by how much.

If you are looking for impartial and up-to-date professioanl financial advice about international investment funds, speak to a deVere Financial Adviser for a whole-of-market approach.

There is no Currency War – Goldman Sachs

This did make me laugh ! There’s no currency war as Japan has already won !!

There is no Currency War – Goldman Sachs.

There is no Currency War – Goldman Sachs

Whilst prominent leaders of BRICS countries unite in South Africa to tackle currency volatility and discuss plans to set up institutions that re-establish the roles of the World Bank and International Monetary Fund, Goldman Sachs believes that there is no so-called Currency War going on.

Yesterday, Ford CEO Alan Mulally complained that the weakness in the Japanese yen is giving an advantage to competitors who can sell for less.

However, experts from the investment bank Goldman Sachs believe that instead, we are just seeing ‘prudent monetary easing’ and thus it was the decline of real rates in some countries that has resulted in weaker currencies.

The prime examples are Japan, which has seen its currency fall due to rising inflation expectations and a decline in real rates; and the UK, which has engaged in outright monetary easing from the Bank of England.
Therefore, Goldman believes that such moves are for the benefit of the global economy as a whole, rather than a Currency War. The bottom line is that what we are seeing is simply classical monetary policy to boost domestic demand.

Meanwhile, at the BRICS summit in Durban, Brazil policy makers warned again of a global currency dispute as nations take reciprocal action to weaken their currencies and protect export industries. Brazil’s real has gained 2% to the dollar since the beginning of the year, while the South African rand has dropped 8.8%.

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Re blogging “Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory”

A great article in the Telegraph on the Yen , Abenomics and debt ,
Looking at Japan is self financing its debt bit for how long ? Abenomics makes JGB looks very interactive , negative yield 1%!

2008 financial crash made many people remember that borrowed money has to be paid ,

In my opinion they will tax , tax , tax ! Which history shows us it never never works , I believe increase the consumption TAX to 10% is a much better option , and then invest in projects to keep Japan in Competitive position .
Japan should stick to its strengths and invest in R&D and engineering .

As always the markets will decide .

Tony Evans

Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory

By Ambrose Evans-Pritchard, in Tokyo4:04PM GMT 26 Mar 2013

“A debt ratio of 245pc of GDP is not really safe, and it is not happening because we are investing,” said Takehiko Nakao, Japan’s ‘Mr Yen’ or vice finance minister in charge of the exchange rate.
Mr Nakao said the scope for further fiscal stimulus is running out and the country must restore public finances to a sustainable path by the middle of the decade. “We can’t continue to expect people to lend money to us,” he told The Daily Telegraph.

The comments touch on an acutely sensitive topic. A number of global hedge funds and banks have begun “shorting” Japan’s debt, the world’s biggest at $23 trillion.
They are mostly taking positions through the credit default swap (CDS) market, betting that Japan will be the next big crisis theme after the US subprime crash and the eurozone debt debacle. The radical new government of premier Shinzo Premier is determined to prove them wrong.

Mr Nakao brushed aside criticism that Japan is engaged in currency war or trying to push down the yen, but acknowledged that there are limits to what the Bank of Japan (BoJ) can do under the rules of global finance.

“We didn’t blame other countries after the Lehman crisis when they had large falls in their currencies. We are using monetary policy to tackle persistent deflation in Japan, and avoid a deflationary spiral,” he said.

Mr Nakao said there is a “shared view” among the developed countries that central banks can legitimately buy any form of domestic asset – as the Bank of England and the US Federal Reserve have been doing – but overseas bonds are another matter.
“We cannot buy foreign assets at our leisure. That would be the equivalent of currency intervention by the Bank of Japan,” he said.

The world turned a blind eye to Japan’s purchases of US Treasuries in 2011 after the Fukushima disaster, when the yen surged to a record Y76 against the dollar. But those were unique circumstances.
The yen has since weakened dramatically to around Y95 under Mr Abe, whose “Abenomics” stimulus policies include a shake-up at the BoJ and a new team of governors committed to reflation.

Veteran Japan-watchers say there is a graveyard full of foreign funds that bet against Japanese debt over the last two decades, only to learn the hard way that the country is sui generis, with vast overseas assets and a captive pool of domestic savings.

The great unknown is whether this is now changing as Japan’s trade surplus evaporates. The International Monetary Fund says gross public debt will reach 245pc of GDP this year. Net debt – stripping out the BoJ’s liquid assets – is much lower but it too is now rising fast.

The IMF says net debt will reach 145pc in 2013, well above the usual safety threshold. Figure has jumped by 50 percentage points since 2008, roughly the same as the jump in Spain and Portugal over the same period.
Japan is the only major nation that has not begun to tighten fiscal policy. The IMF says the primary budget deficit was 9pc of GDP last year, yet the Abe government is launching a fresh $200bn blast of stimulus worth 2pc of GDP to kick-start recovery.

Mr Nakao plan is to withdraw the stimulus gradually once recovery gains traction, with a rise in VAT from 5pc to 8pc next year, and then to 15pc. Mr Abe has vowed to cut the primary deficit to 3pc by 2015. “We think that is unrealistic,” said Junko Nishioka from RBS.
Chisato Haguma, chief equity strategist at Mitsubishi UFJ, said the government must curb “exploding social security outlays” as Japan’s ageing crisis hits.
However, he said the high debt level is overstated since the vast assets of the state – including land – dwarf liabilities, and could be sold off if needed. “They have more options than assumed. There is not going to be a fiscal crisis in the next two to three years, but there could be one later,” he said.

Foreign hedge funds have made much of recent moves by the state pension fund GPIF to start selling off part of its vast holding of government bonds (JGBs).
Mr Nakao said the selling is a temporary blip caused by bulge of retiring baby-boomers. The GPIF will soon be a net buyer again and will continue to accumulate for another thirty years.
The IMF has warned repeatedly that Japan is pushing its luck. The Fund has advised fiscal tightening of 10pc of GDP by 2020 just to stabilise the debt level.

It said there is plenty of “low-hanging fruit”, advising Tokyo to raise the retirement age from 65 to 67, and remove the tax subsidy for dependent spouses to make it worthwhile for women to continue working.
Yet the Fund said Japan is uncomfortably close to a debt compound trap, and could face trouble if borrowing costs ratchet up. “Even a moderate rise in yields would leave the fiscal position extremely vulnerable,” it said, warning that this would have implications for the entire world.
“Even a relatively small increase in the sovereign risk premium would make fiscal consolidation more difficult, pose challenges to financial institutions, harm growth prospects in Japan, and could spill over to global risk premia and growth. In this regard, Europe’s recent experience offers a cautionary tale. Once market confidence is lost, regaining it becomes very difficult.”

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