Japan Pension Fund Becomes Net Government Bond Seller

So far every bet against JGB´s was a disaster.... But is at least not insignificant when the largest buyer for years has turned to a net seller...... I think when you take a look this link, the following presentation, the confident Rating Agencies & yields like this i think it´s safe to assume that the upside for bonds is "not substantial"......

Bisher haben Wetten gegen japanische Staatsanleihen etliche in den Wahnsinn und sicherlich auch in den finanziellen Ruin getrieben... Wenn aber nun der mit Abstand größte Akteur in diesem Segment nach Jahren von einem massiven Käufer zum Verkäufer notiert lässt das zumindest aufhorchen.....Wenn man sich diesen Link , die folgende Präsentation , die ( noch ) optimistischen Rating Agencies & die aktuellen Renditen vor Augen führt darf man sicherlich behaupten das sich das Chance/Risikoverhältnis nicht gerade merklich bessert...

Japan - Past the Point of No Return - By Vitaliy Katsenelson

H/T Barry Ritholtz

Flashback March 2010

The biggest JGB holder on the planet – the Government Pension Investment Fund (GPIF) – which has already admitted it’s no longer able to roll maturing bonds, has announced that it will open credit lines so it doesn’t have to sell them to fund its obligations…

Looks like they had to end the desperate attempt to stop the unavoidable....

Sieht ganz so aus als wenn jetzt der Zeitpunkt gekommen ist wo das Unvermeindliche nicht mehr länger hinausgezögert werden kann.....

Japan Pension Fund Becomes Net Government Bond Seller

July 13 (Bloomberg) -- Japan’s public pension fund sold more government bonds than it bought for the first time in nine years, underscoring concern that an aging population will make domestic investors less able to finance state borrowings.

The fund sold a net 443.2 billion yen ($5 billion) of Japanese government bonds in the year ended March 31, according to Bank of Japan data released last month. It held 79.5 trillion yen of the securities at the fiscal year end, 11.6 percent of the outstanding amount.

The retirement of baby boomers -- defined in Japan as those born between 1947 and 1949 -- may strain the public coffers as soon as 2012, according to Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute in Tokyo. “That may be when Japan’s sovereign risk becomes evident,” he said in an interview in May.

So far the € crises has helped to fill the gap......

Da kommt die momentane € Krise ganz passend.....

M.Pettis

China bought a record amount of Japanese government bonds in May, in an apparent move to shift more of its massive foreign exchange reserves into Japanese debt. Chinese net purchases of Japanese government bonds soared to Y735.2bn ($8.3bn) in May, far outpacing the Y541bn in JGBs bought from January to April, according to Japanese finance ministry figures.

It will be interesting to see if or probably better when the BOJ will be "forced" to start QE Version 18 & 19..... With or without QE this alternative looks much more promising.....

Denke der entscheidende Faktor dürfte sein was die BOJ in Sachen QE machen wird.... Dürfte da über die Jahrezehnte wohl dann Version 18.0 & 19.0 sein..... Mit oder ohne QE ich denke diese Alternative dürfte in jedem Fall vielversprechender sein

Maybe This Time It Is Different.........

So far every bet against the Japanese bond market was a disaster..... But the latest move from the GPIF ( $1.37 trln / 66.32percent of its assets in domestic bonds ! see Profile GPIF Government Pension Investment Fund, Japan ) is really looking "unconventional".....

Bisher ist jeder der gegen japanische Staatsanleihen (JGB) gewettet hat übelst auf den Bauch gefallen.... Da der letzte Schritt des 1.37 trln $ schweren und zu knapp 66% in JGB´s investierten GPIF ( mehr Details GPIF Government Pension Investment Fund, Japan ) allerdings doch recht "unkonventionell" daherkommt ist der Ausgang zwischen Bullen und Bären wohl ungewisser denn je.....

H/T Claire Morel / Reuters

‘Japan’s brewing fiasco’ SocGen’s Dylan Grice via FT Alphaville

The biggest JGB holder on the planet – the Government Pension Investment Fund (GPIF) – which has already admitted it’s no longer able to roll maturing bonds, has announced that it will open credit lines so it doesn’t have to sell them to fund its obligations…

To spell that out: we are going into a year in which the government has ¥213 trillion of bonds to roll over… and the biggest holder of JGBs is openly admitting he has no new inflows of money

Click here & here to get the entire report... Some pretty scary charts & the following stat............

Den kompletten Research Report gibt es hier & hier ... Einige extrem unschöne Charts sowie die nachfolgende Zahl..........

So who will fund the Japanese government´s deficit in the future? It is not likely to be the international capital markets, especially if its bonds are offering only a 1.5% yield.

But if international investors were to demand triple that, pricing JGBs in line with international bond market peers (all priced too generously in my opinion) the game would soon be up because Japan´s current debt service already amounts to 35% of pre-bond issuance revenues.

H/T Zero Hedge

For more on this topic make sure you visit the excellent slide show Japan - The Point Of No Return from Vitaliy N. Katsenelson via Barry

Wer mehr zu diesem Thema sehen möchte dem empfehle ich die erstklassige Ansammlung von Charts Japan - The Point Of No Return von Vitaliy N. Katsenelson via Barry

GOLD Is Not A $ Story........ ;-)

Norinchukin, Owned By More Than 4,000 Shareholders Including Farm, Fishing & Forestry Cooperatives Has To Raise $ 20 Billion.....

WOW! This makes the followoing quote from their Annual Report 2008 even more "amusing"....

Donnerwetter! Die heutige Ankündigung macht die nachfolgende Bemerkung aus dem Annual Report 2008 vom März 2008 noch befremdlicher....

We, therefore, decided to invest our management resources in securities, both in Japan and overseas, under the concept of globally diversified investment.That means that we had decided to switch our business model from that of a conventional nvestor in the Japanese domestic market to a major investor on the international stage and raise our earning ability by carefully controlling our risk exposure.

The fact that the bank is owned almost solely from "cooperatives" makes the whole story even more stunning..... SCARY !

Das ausgerechnet eine Art Genossenschaftsbank hier den Vogel abschießt zeigt einmal mehr das man momentan rein gar nichts auschließen kann..... Beängstigend !

Norinchukin to Raise 1.9 Trillion Yen; CEO Quits Feb. 20 (Bloomberg) -- Norinchukin Bank, the Japanese agricultural lender with Asia’s largest losses on asset-backed securities, plans to raise 1.9 trillion yen ($20.2 billion) in capital and said its chief executive officer will step down.

Deputy President Yoshio Kono will replace CEO Hirofumi Ueno effective April 1, the company said in a statement today in Tokyo. Norinchukin will raise the funds from its members, a nationwide network of agricultural cooperatives with about $875 billion in deposits, by the end of March.

The fund-raising is the biggest in Asia since Industrial & Commercial Bank of China Ltd. collected $22 billion in the world’s largest initial public offering in 2006. Norinchukin lost at least $10 billion on overseas asset-backed securities following the collapse of the U.S. housing market.

“Norinchukin’s capital faces increasing impairment risk due to its relatively large exposure to foreign securitized financial products,” Moody’s Investors Service said in November, when it revised the outlook on the Tokyo-based bank’s Aa2 credit rating to “negative” from “stable.”

> Reed this number twice........ We won´t probably see too many happy Japanese fischers etc for some time to come......

> Dank der nun folgenden schier unglaublichen Zahl wird man den Namen NORINCHUKIN wohl noch öfter im Zusammenhang mit negativen Schlagzeilen hören...... Glückliche japanische Fischer & Förster werden wohl die Ausnahme bleiben......

Norinchukin still had 6 trillion yen of asset-backed securities at the end of December

> Taken from their Presentation Of Capital Positions. For more updates visit their News Release Overview.

‘Material’ Pressure
Standard & Poor’s cut Norinchukin’s financial-strength rating in December, citing “material” pressure on capital. The bank had a Tier 1 consolidated capital-adequacy ratio of 6.83 percent under Basel II standards as of Dec. 31, down from 9.39 percent as of March 31, it said in a statement today.

Profit at the Tokyo-based bank, which was founded in 1923 and makes loans to farmers and fishermen, plunged 95 percent to 7.8 billion yen in the six months ended Sept. 30, from 143.6 billion yen a year earlier, as it posted an 81.5 billion yen loss on asset-backed securities.

Norinchukin was founded as a semi-governmental financial institution and was privatized in 1959, according to its Web site. The company had 4,260 shareholders at the end of March, made up of agricultural, fishery, forestry and related cooperatives.

Number Of The Day "Japan´s Export Plunge Record 27 Percent"

WOW! The strong Yen didn´t help......... I expect that the entire currency complex has the potential to become the next "battleground" ( hopefully not combined with "trade wars" see Has Beggar Thy Neighbor Started? via Naked Capitalism & The Major Risks for 2009: Tariffs, Wars, Currency, etc. from Merrill Lynch's David Rosenberg via Infectious Greed)........ The race to the bottom is already underway..... Let´s hope that we won´t see a crash of a major currency ( british Pound )...... At least there will be always a bull market ( one weak vs another less weak currency)..... Got Gold......?

Donnerwetter! Bleibt zu hoffen das wir als vergleichbare Exportnation etwas besser abschneiden...... Denke den Japanern wird gerade jetzt der erstarkte Yen nicht sonderlich gefallen..... Ich befürchte das uns das Thema Wechselkurse in den kommenden Jahren desöfteren heimsuchen wird ( hoffnetlich nicht auch in Form von "Handelskriegen" siehe auch Has Beggar Thy Neighbor Started? via Naked Capitalism & The Major Risks for 2009: Tariffs, Wars, Currency, etc. von Merrill Lynch's David Rosenberg via Infectious Greed)...... Der Versuch die Währung möglichst schwach zu halten ist weltweit bereits im vollen Gange. Ich würde mir nur wünschen das wir das ohne Kollaps eine der größeren Währungen überstehen. Denke da besonders an das britische Pfund...... Immerhin ermöglichen diese Märkte immer einen garantierten Bullenmarkt ( schwache vs einer wenigen schwachen Währung ) ...... Got GOLD?

Thanks to Bespoke

Japan Exports Plunge Record 27% as Recession Deepens Dec. 22 (Bloomberg) -- Japan’s exports plunged the most on record in November as global demand for cars and electronics collapsed, signaling more factory shutdowns and job cuts are likely as the recession deepens.

Exports fell 26.7 percent from a year earlier, the Finance Ministry said today in Tokyo. That was more than the 22.3 percent decline estimated by economists and the sharpest since comparable data were made available in 1980.

Shipments to the U.S. slid an unprecedented 34 percent and sales to China slumped the most in 13 years

The government today lowered its assessment of the world’s second-largest economy, saying it’s “worsening” for the first time since 2002. Gross domestic product shrank in the past two quarters, sending Japan into its first recession since 2001.

Toyota, Honda Motor Co. and Sony Corp. are among the companies that are shedding thousands of workers and closing production lines as profits dwindle. Car exports slid 32 percent last month, the most ever, and semiconductors slumped 29 percent, the ministry said.

UPDATE : Toyota Forecasts First Operating Loss in 71 Years on Yen, Sales

Compounding the drop in demand is the stronger yen, which erodes overseas profits. Every 1 yen gain against the dollar and euro trims Toyota’s annual operating profit by 40 billion yen and 6 billion yen, according to the company. The carmaker in November based its second-half earnings outlook on 100 yen to the dollar and 130 yen to the euro.

Today’s report showed the global recession is spreading to the emerging markets that propped up exports as demand from the U.S. and Europe evaporated. Exports to Asia fell 27 percent, the most in 22 years. Shipments to China, Japan’s largest trading partner, tumbled 25 percent, the steepest decline since 1995.

Exports to Europe slid 31 percent, the second-most ever.

Poof....There Goes The Carry Trade....

This should come as no surprise. On top of all the players that leveraged them to their eyeballs the clearest sign that something was about to happen came direct from Japan . The following stats are taken from Housewives Outmaneuver UBS, Deutsche Bank Trading Yen .

Das dürfte aber nun wirklich niemanden überraschen. Zu einen sind fast alle Marktteilnehmer bis über beide Ohren ins Risiko gegangen auf der anderen Seit kam das wohl klarste Signal direkt aus Japan. ( siehe Housewives Outmaneuver UBS, Deutsche Bank Trading Yen )

Japanese businessmen, housewives and pensioners betting against the yen in their spare time are wrecking the forecasts of the world's biggest currency traders

They tripled their trading in the year ended March to a record $11 billion a day

In Japan, individuals have opened 600,000 so-called margin trading accounts at brokerages that lend money for currency bets, 80 percent more than a year ago

Feels a little like the cab driver giving stock tips

Bei uns würde man das wohl "Milchmädchenhausse" nennen....

Thanks to Henry k. To. Chart taken from Market Not Close to Capitulation Just Yet

Chart does not include the brutal move today in Asia

As mentioned o n the above chart, the most recent correction in the four popular Yen cross rates is still not severe enough as what we witnessed during the late February to mid March correction. More importantly, these cross rates have only corrected to levels last seen during early June - definitely nowhere close to "capitulation" levels and a far cry to what we witnessed in Fall 1998, when the Yen - at one point - rose over 10% in a space of 24 hours!

bigger/größer

> It will be interesting to see how all the Japanese investors will react.... I can imagine that some of them are drinkng more Sake than usual...... :-)

> Ich bin gespannt wie all die japanischen Investoren reagieren werden... Ich kann mir gut vorstellen das einige in letzter Zeit mehr Sake als gewöhnlich getrunken haben... :-)

Aug. 16 (Bloomberg) -- The New Zealand dollar slumped, heading for its biggest weekly loss since the 1987 stock market crash, as investors slashed holdings of high-yield assets funded by loans in yen.

Australia's dollar, another favorite for investors who bought the nation's securities with money borrowed cheaply in Japan, tumbled as a drop in Asian stocks encouraged investors to unwind their carry trades. Both currencies fell to their lowest in more than four months against the dollar and yen on concerns losses related to subprime mortgages are deepening.

``The subprime issue is the center of the credit crisis universe and everything else is orbiting around it,'' said Alex Sinton, senior currency dealer at ANZ National Bank Ltd. in Auckland. ``The kiwi is one of fringe planets in that universe and it's going through a meteor belt at the moment.''

New Zealand's dollar slid 3 percent to 69.39 U.S. cents at 3:08 p.m. in Wellington. It fell as low as 69.37 cents, the weakest since March 16. It has tumbled 8.4 percent in the past 5 days and 14 percent since touching 81.10 cents on July 24, the strongest since being allowed to trade freely in 1985.

The currency also tumbled 3.2 percent against Japan's currency to 80.79 yen after having the biggest loss since December 2005 yesterday.

The Australian dollar declined 1.2 percent to 81.40 U.S. cents from late in Asia yesterday. It touched 81.38 cents, the least since April 5 and lost 4.9 percent over the past five days, the most since May 2004. The currency fell 1.5 percent against the yen to 94.72.

`Jumped On'
``The kiwi and Aussie will underperform,'' said Jonathan Cavanagh, a currency strategist at Westpac Banking Corp. in Sydney, referring to the currencies by their nicknames. ``Any bad news is jumped on in a big way.''

The Morgan Stanley Capital International Asia Pacific Index of shares fell 3.4 percent to the lowest since March.

Japan's 0.5 percent overnight lending rate is the lowest of any major economy. New Zealand's central bank raised borrowing costs four times this year to 8.25 percent and the Reserve Bank of Australia increased rates last week to 6.5 percent, making their currencies more appealing for carry trades.

New Zealand Finance Minister Michael Cullen said the nation's currency, which has slumped 11 percent the past three weeks, is still unjustifiably high.

> And when you look at the cuurent account balance...... But who cared about fundamentals just a few weeks ago....

> Wenn man sich die Daten zum Defizit ansieht ist diese Aussage mehr als berechtigt.... Aber wen haben bis vor einigen Wochen Fundamentaldaten interesssiert.......

Abn Amro "won't Touch This", Comparison of UK and US housing markets / pdf

i disagree with the optimistic abn ambro view about the us houisng market. but i think they a correct view on the uk market. ugly!

ich stimme sicher nicht mit der zu optimistischen abn sichtweise in sachen us immobilienmarkt überien, baer ich denke das sie den uk markt extrem gut treffen. sieht übel aus!

thanks to "bobsta"

U can’t touch this
Dario keeps handing us sticks to beat him with. After telling us about his pink mountain bike last week, he recently revealed his most recent music purchase: MC Hammer. This makes his criticism of Rob’s musical tastes (the Pet Shop Boys and Abba) look pitiable. Obviously, this has very little to do with the subject of today’s Overnight Report, which focuses on the US and UK housing markets. Except that markets clearly believe it’s ‘Hammer time’ for US housing, while UK housing is ‘Too Legit to Quit’. But if you ask me, it’s UK homeowners who need to Pray’ (Perkins tells me these are MC Hammer song titles – we’ve hit a new low).

i can´t stand mc hammer so i´ve taken the "family guy" version :-)

Tim has outlined our view on the US housing market in previous Overnight Reports,so there’s little point in repeating the analysis. In short, we remain optimistic that the economy will prove resilient to problems in housing and the worst could already be behind us.

> very optimistic...i disagree

> extrem optimistisch. ich denke wir sehen gerade erst den anfang

Yet despite our upbeat view, we recognize why investors are concerned. If problems in sub-prime cause a broader credit crunch across the economy, we could end up looking pretty silly (a feeling familiar to some of us – Ed). Still, there seems to be an inconsistency here. Markets appear relatively relaxed about the UK housing market, which looks more vulnerable to a correction.

At this stage, I should probably clarify something. We don’t deny that US housing is overvalued. House prices will need to fall in real terms over the medium term. Yet given solid employment growth, rising incomes and – most importantly - unusually low long-term interest rates, it seems possible to rationalize where we are now.

>i think they left out speculation, excess, fraud, lax lending, creative financing ......

> denke die unterschlagen hier galanterweise spekulation, betrug, keine kreditstandtarts, kreative finanzierungsformen,......

In contrast, developments in the UK look harder to explain. Still, it hasn’t stopped some from trying. We are told the lack of spare land, rising immigration and demographic factors justify the premium on UK housing. But I’m yet to be convinced. These factors should boost prices and rents by a similar amount, as marginal buyers are forced into the rental market. Yet prices have risen far more quickly than rents over the last decade. The ratio of house prices to rents is now almost 50% higher than its long-run trend, compared with around 25% in the US. In fact, prices have risen so much faster than rents that rental yields are now below mortgage rates. In other words, property ‘investment’ is generating a negative cashflow. It’s only the expectation of further capital gains that is sustaining demand.

With house prices appearing more detached from fundamentals, the UK housing market could be more vulnerable to a correction than the US. There are also reasons to believe this could be more problematic for the wider economy. Owing to the lack of supply flexibility (economists call it an ‘inelastic’ supply curve), the burden of adjustment would fall on prices rather than quantities, the opposite to what we have seen in the US (see the illustration on page 2). This is how ‘spillover’ effects could occur. Falling house prices would depress household wealth and spending, especially as UK consumers hold a larger share of their wealth in housing than in the US. And given the concentration of default risk and sharper increases in household debt, the banking sector could also be exposed. While the latest RICS survey shows UK housing is still ‘Gaining Momentum’, we all know ‘This is the Way We Roll’: a housing market collapse will undermine confidence in sterling, preventing the Bank of England from cutting rates and prolonging the downturn.

It seems puzzling that markets worry about excesses in the US, but remain relatively unconcerned about the situation in the UK. The UK has experienced much sharper increases in house prices than nearly all other developed economies in recent years (Chart 1). Is this justified? We think not.

Numerous attempts have been made to rationalize the premium on UK housing. These arguments generally highlight the shortage of supply or a sustained increase in demand (due to immigration or demographics). Yet these trends arenot exclusive to the UK. The Netherlands and Japan have more acute land shortages, but have experienced less rapid increases in house prices

More significant, an increase in housing demand or shortage of supply should put upward pressure on rents, as well as on prices. Over the long-term, rents and house prices should grow in line with each other. Yet this has not been the case. Prices have risen much more rapidly than rents in recent years, suggesting UK housing is overvalued by nearly 50% compared with about 25% in the US (Chart 2).

Rather than fundamentals supporting the housing market, expectations of future gains and speculative activity seem to be driving prices higher. The level of rental yields is perhaps the clearest evidence of this. In the UK, rental yields have fallen below mortgage rates (Chart 3). This implies that housing ‘investment’ is generating a negative cashflow. With buy-to-let demand now accounting for 25% of all new mortgages, this illustrates how fragile demand could be to a shock to expectations.

This greater degree of overvaluation makes UK housing more vulnerable to acorrection than the US. It could also have more significant implications for the wider economy. Owing to the lack of land and inelastic supply, the burden of an adjustment would fall on prices rather than quantities. A given change in demand will generate a larger drop in prices (Chart 4). In regions where land is more abundant, such as the US, the adjustment primarily comes through quantities (i.e. construction output). A fall in UK house prices would depress household wealth, hurting consumer spending. It could also leave the banking sector exposed. If sterling then collapses, the Bank of England could find itself unable to respond.

lets hope abn is allowed to "stay" with their view after their takeover from the british barclays.......

bleibt zu hoffen das abn die selbe sichtweise auch nach der übernahme durch die britische barclays beibehalten "darf"

carry trade spreading to japanese households / retail investors

looks like the carry trade don´t need hedge funds and the big player to continue and to inflate.... thanks to the boj for the zero interest rate policy.....

read more about japan and the bank of japan http://nihoncassandra.blogspot.com/

sieht ganz so aus als wenn der carry trade inwzischen sogar den kleinen mann und normalen anleger erreicht hat. ob sich die notenbank bei solch einer entwicklung nicht fragt ob sie was verkehrt gemacht hat. mehr zur boj unter dem o.g. link

The yen was lower against all 16 of the world's most- actively traded currencies over the past month, with the biggest losses versus higher-yielding currencies such as the Australian and New Zealand dollars. Borrowing costs in both countries are 5.75 percentage points and 7 percentage points higher than those in Japan, respectively.


``The yen's downtrend will continue as Japanese, who are fed up with low returns, will continue to export capital,'' Tokyo-based Umemoto said in an interview on April 2. ``Individuals will play the leading role.'' The fastest pace of growth in three years in the quarter ended Dec. 31 gives individuals greater confidence to send money offshore, he said.

Overseas assets held by Japanese households reached 46 trillion yen ($387.2 billion) in 2006, nearly 10 percent of the nation's gross domestic product, but only 3 percent of their total financial holdings, based on Umemoto's own calculations.

Breathing Room
The Japanese currency traded at 118.85 per dollar at 3:04 p.m. in Tokyo from 118.96 late in New York yesterday. The yen is down 0.9 percent this week, the first of the fiscal year that started April 1.


It gained 1 percent last quarter as some investors exited carry trades, where they borrow and sell yen for better returns elsewhere, because of a global slump in stock markets.

``It's likely that there's breathing room for households to shift money from safe but low-return deposits to riskier, higher return assets abroad,'' said Masafumi Yamamoto, a strategist at Nikko Citigroup Ltd. in Tokyo and a former Bank of Japan currency trader. ``The Japanese ratio at 3 percent does not look particularly high.''

Yamamoto is less bearish on the yen than his counterpart at Barclays, predicting the currency will fall to 119 a dollar by June 30. He said Japanese overseas holdings rose 27 percent last year from the previous year, citing data compiled by the Bank of Japan, monthly data from the Investment Trust Association Japan, and Citigroup's own estimates.

Bank Deposits
Japanese mutual funds boosted purchases of assets abroad to about 40 percent of the total from about 8 percent in 2002, according to the Investment Trust Association. The mutual funds now have about $244 billion of assets denominated in foreign currencies, including $98 billion in the U.S. dollar.

The yen weakened 5.9 percent versus the New Zealand dollar and 5.3 percent against Australia's currency in the past month. Australian and New Zealand 10-year government bonds both offer a yield premium, or spread, of 4.20 percentage points over similar-maturity Japanese debt. Securities in Germany give an extra 2.4 points.

>coinicidence / zufall ?

thanks to http://kevinsmarketblog.blogspot.com/index.html

more on the correlation of risk taking and the yen from mike larson http://tinyurl.com/2a5xap

The ratio of Japanese household savings parked in banks and post offices accounted for about half of their total financial assets of 1,550 trillion yen, compared with 10 percent in the U.S. and 30 percent in Europe, Barclays' Umemoto said. That will continue to decrease as more funds go overseas, he said. ....

Japan is seeing a rise in so-called margin trading, where retail investors borrow part of the money necessary to buy currency, seeking to make a profit on price gains.

``The presence of foreign-exchange margin traders is increasing in Tokyo,'' said Kenichiro Yoshida, a senior economist and currency analyst in Tokyo at Mizuho Research Institute, a unit of Japan's second-largest lender by assets. ``Younger generations such as in their 30s are trading currencies even by mobile phone.''

Individual Power
Japanese individuals' foreign currency-denominated assets exceeded 40 trillion yen in 2006, topping such assets held by life insurers, the Nikkei newspaper also reported on March 31, excluding the estimated amount of foreign-currency positions by Japanese foreign-exchange margin traders.

Life insurance companies, commonly known as Seiho in Japanese, used to play a major role in the financial markets of the late 1980s during Japan's asset-inflated bubble economy by purchasing massive amounts of foreign bonds.

``We cannot ignore individual power,'' said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank in Tokyo. ``Japanese individuals account for about 20 percent to 30 percent of foreign-exchange margin trading in the Tokyo time zone. Institutional investors will lag behind households.''

> should be no suprise that gold is speaking loud and clear

>gold in yen spricht hier ne eindeutige sprache......

........to be continued......

BOJ Is Watching Land Prices for Excess, Fukui Says

i haver never understand the japanese sense of humor.......

der japanische humor wird mir wohl immer ein geheimnis bleiben ......

i stay with homer..... / da bleibe ich doch lieber bei homer....

March 27 (Bloomberg) -- Bank of Japan Governor Toshihiko Fukui said he's closely monitoring land prices after a report showed real estate in some parts of Tokyo surged as much as 46 percent last year.

``We aren't yet in a situation in which land-price gains warrant concern of excessiveness, but we'd like to keep a close watch on them,'' Fukui said in parliament today. ``Rising land prices won't automatically prompt a rate increase.''

Concern that borrowing costs at 0.5 percent will fuel land- price gains could prompt the Bank of Japan to raise interest rates in the first half of this year. The central bank wants to avoid a repeat of an asset-price bubble, the collapse of which in the early 1990s led to more than a decade of stagnation in the world's second-largest economy.

``Land prices are rising, and that's spreading to other big cities'' .... ``This may increase chances of a rate increase before the July upper house election.''

Commercial land prices in Japan's three biggest cities rose 8.9 percent in 2006, the government said on March 22, as investors were lured by large-scale developments including Mitsui Fudosan Co.'s Tokyo Midtown project, which opens this week.

``We've got a clear impression that the recovery of land prices is becoming evident mainly in large cities,'' Fukui said, adding that gains in Tokyo, Osaka and Nagoya were ``prominent.''

Omotesando Hills
Commercial land in and around the three cities rose for a second straight year, after gaining 1 percent in 2005, the government said last week. Residential land prices increased for the first time in 16 years, up 2.8 percent.

The steepest gains were recorded in areas near Omotesando Hills, a retail and residential development in central Tokyo that opened on Feb. 11 last year. Commercial and residential land prices both rose as much as 46 percent near the project.

Japan's two largest developers will open developments in central Tokyo in coming weeks. Mitsui Fudosan's Tokyo Midtown project includes the city's tallest building. Mitsubishi Estate Co. is scheduled to open a new 42-story skyscraper in front of Tokyo Station in April.

``The recovery in land prices generally reflects the improving outlook for the economy and higher expectations for profits that can be made by utilizing land,'' Fukui said.

Land prices nationwide rose for the first time in 16 years in 2006 as gains in Tokyo, Osaka and Nagoya compensated for drops elsewhere in the country, last week's report showed. Japan's commercial and residential land values are still half the levels reached in 1988.

Some Areas `Overheating'
Finance Minister Koji Omi said last week that the gains don't signal another bubble is emerging. Economic and Fiscal Policy Minister Hiroko Ota said some areas are ``overheating'' and the government will ``watch developments closely.''

more on japan from tim http://tinyurl.com/29rcnr

bank of japan + savings rate

the boj has lost a lot of credibility. on the one hand they want to stop the addiction of cheap money, they want to end the carry trade, they want to implement a forward looking policy, and they have adopted the "core" rate excluding food.....(they are really serious about their inflation fighting mission....) etc.......

die bank of japan (boj) hat meiner meinung nach fast all ihre glaubwürdigkeit verloren. auf der einen seite will sie japans "sucht" nach billigem geld unterbinden, dann wollen sie den carry trade beenden, dann eine vorausschauende zinspolitik implementieren, dann haben sie in schöner us manier mal eben die "kern" rate adoptiert ( man sieht wie ernst es mit der inflationsbekämpfung ist.....

thanks to barry ritholtz http://bigpicture.typepad.com/

the full article (headline) gets to the usual carry trade ( better sources at the label) and deflation issue. i want to focus on the savings rate. this number is really surprising.

der ganze artikel (überschrift klicken) geht auf die üblichen sachen wie carry trade ein. empfehle dazu eher unter dem label zu lesen. ich finde die sparrate am interessantesten. und die ist in der tat ne echte überraschung!

.....The BoJ has been held back until now by the choppy state of the Japanese economy. After a particularly bleak third quarter, when it eked out annualised growth of just 0.3%, the fourth-quarter numbers announced last week came as welcome relief. For the three months to December, the economy grew at an annual rate of 4.8%, its fastest pace in three years. Much of the gain was thanks to stronger personal spending, which was up by an annualised 1.1%. This was mainly a rebound from the previous quarter, when spending fell by much the same amount. ......

The bank is counting on consumption, which accounts for 55% of Japanese GDP, to become the locomotive of the economy. Households are certainly spending what they have. According to the OECD, Japan's household saving rate has fallen by over eight percentage points since 1998, a deeper plunge than America's. The country's households now fail to dispose of just 2.9% of their disposable income.........(wow!!)

at least they have not an official "strong yen policy"............. like the us :-)


here is one example of how widespread the carry trade is (thanks to russ winter )http://wallstreetexaminer.com/blogs/winter/?p=451#comments

Last year, the surge of short-term external debt was engineered by South Korea’s commercial banks, which were anxious to increase profits by borrowing yen to expand domestic household credit. In many instances, Koreans used very low-interest yen credit offered by South Korea’s commercial banks to finance speculative mortgages in the country’s real-estate market. This has left Korean households with large unhedged exposure to the Japanese yen and South Korean banks facing the prospect of widespread mortgage default in the event of the yen’s reversal. South Korea’s commercial banks also have enormous unhedged exposure to the yen through massive carry trades on their own balance sheets.”

japan, tech and housing bubbles 1985-2006

dank geht an mish und sein http://www.markettradersforum.com/forum1/

make sure you see the other great bubble charts (credit, subprime etc) from John Rubino !
http://www.financialsense.com/editorials/rubino/2006/1129.html


größer/bigger http://www.financialsense.com/editorials/rubino/2006/images/1129.h4.jpg