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December 1, 2005

Roaring bull in Japan, Thur., Dec. 1, 2005, 6:52 AM

While this morning's U.S. equity market futures are very strong which is surprising to me after yesterday's strong sell-off, the strength in Japanese stocks was not unexpected.

With USD flowing into Japan, and traders figuring that presumed interest rate hikes in Europe will further advance the fortunes of Japanese exporters, the bull market in Japan has taken the Nikkei and TOPIX indexes to 5-year highs.

Interesting to me was to awake to the CNBC market button flashing higher prices in Japan and Hong Kong. Missing were Australia, New Zealand, Malaysia, Taiwan and China " perhaps because they were all down significantly overnight.

I point this out because it has been quite a while since I have observed Asia/Pacific equity markets so divergent.


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Posted by Posted by Bill Cara on December 1, 2005 06:44:06 AM | Category: Japan

Discourse

This may play out as I expected. Quick early December attempt to take this to 11,400, then (gulp) it could get rocky from those heights. If so, I will put in my hedges on the longs I can't exit, PG and VGHCX. Miners? Keeping those (GG, GLG, AU, HMY, GFI)til gold hits $1000. :)

Posted by: MarkM [TypeKey Profile Page] at December 1, 2005 8:19 AM [link]

Bill,

Just wanted to pass on some mind numbing numbers related to home equity extraction here in the U.S.:

- Greenspan co-authored a report last month with a fellow Fed economist, James Kennedy, and they found that the combination of home equity lines of credit, capital gains from home sales and mortgage equity cash-outs added about $700 billion to economic activity in 2004

-Jan Hatzius, a Goldman Sachs economist, estimates Americans will withdraw $834 billion from residential real estate this year!

-Third quarter Freddie Mac numbers disclosed that equity cash-outs from mortgage refinancing came to $60 billion, and this followed $60 billion in the second quarter and $45 billion in the first quarter.

-At the same time the personal savings rate declined from an average of +1.7% in 2004 to a record low -1.1% in the third quarter of this year

No wonder that GDP was reported at 4.3 pct Y/Y. (Goldman's estimates are that consumers spend ~68% of the cash they extract through home-equity loans and refinancing (most of the rest is used to pay down credit-card debt or invest). Is this the proverbial "house of cards"?

Posted by: JIM [TypeKey Profile Page] at December 1, 2005 8:38 AM [link]

But remember Jim that it's a NEW PARADIGM! This is the SUPER DUPER GREENSPAN CONSUMER AND FINANCIAL SERVICES DRIVEN ECONOMY and that it's gonna ALL BE DIFFERENT this time!

See you at the bottom! (With apologies to Zig Ziglar)

Posted by: MarkM [TypeKey Profile Page] at December 1, 2005 8:50 AM [link]