Japan

‘s Kung Fu Grip, One Finger at a Time..

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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 … Read more

Six Reasons to Avoid Japan In 2012

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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 … Read more

Japan Unemployment Rate Rises as Noda Becomes Prime Minister

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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 earthquake. 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 report showed. 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 … Read more

‘s cuts Japan rating, blames politics

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(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 … Read more

The Japan Investor – You Need One Megabank

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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 … Read more

Oil Hysteria: The Resurrection of Peak Oil

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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.

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Japan…The new Black Swan.

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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;

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