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Hi DT,
Thursday, July 3, 2003, 6:18:40 PM, you wrote:
DT> Trading volume edged higher to 1.13 billion shares versus 936 million
DT> on Wednesday morning. If the full session's volume breaks two
DT> billion, it would be the first time since February 23, 1989, near the
DT> end of the asset bubble. Gainers outnumbered decliners 749 to 655.
I did break 2 billion, of course. Easily.
DT> But with the high volume flowing heavily into blue chip stocks,
DT> several highly liquid shares that had posted strong gains in
DT> recent sessions eased.
DT> Nippon Steel Corp (Tokyo:5401.T - News), the world's second-largest
DT> steel maker, was down 1.16 percent at 170 yen, falling after six
DT> straight sessions of gains.
I love this. What drivel. A 170 yen stock has a minimum tick of one
yen. So, a two- or three-yen movement, after six sessions of gains,
is a harbinger of disaster? Or even worthy of comment? Where do
they get these guys?
DT> Megabanks, which had also soared in recent sessions after the market
DT> rally helped ease worries about losses on their massive stock
DT> holdings, also retreated from earlier highs in volatile trade, with
DT> some investors expressing concerns about the battering Japanese
DT> government bonds took on Thursday morning.
Now here, is an interesting story, and one that is simply being
overlooked by people who have doubled the shares of megabanks this
month. If there is an international conspiracy to reflate, and I
don't think there is much doubt about that, what is this going to do
to Japanese bond yields, which were at about 0.5 percent for ten-year
paper recently. The banks have been the big buyers of this debt,
nobody else in the world is too interested in coupons at that rate.
So, the stock market run up has undoubtedly helped Japanese banks'
balance sheets, but . . . banks have been dumping stock for years,
and buying . . . guess what . . . bonds. Bonds that are probably a
ticking time bomb -- although at least you can sit on them and get
your principal back. So this is a concern, and it may finally be
getting some attention. People have been piling into the banks like
all of their problems are solved. They are not. But they have
pulled back from insolvency for the moment.
DT> Mizuho Financial Group (Tokyo:8411.T - News), the world's largest
DT> bank by assets, was unchanged at 122,000 yen after earlier rising as
DT> high as 134,000 yen.
Closed at 113,000, one tick off the low, and down 9,000. A big
reversal there. Opened at 69,400 on June 4th. ^_^
DT> Some analysts also said a newspaper report saying Japan's financial
DT> watchdog was likely to give up a plan for now to tighten rules on
DT> assessment of banks' capital had also contributed to the broader
DT> market's late morning retreat.
Would be par for the course. But this rally has saved their capital
ratios.
DT> "The report might be good for bank shares themselves, but it also
DT> could be giving some the impression that the government is putting
DT> off its structural reforms," said Hiroaki Kuramochi, head of equities
DT> at Credit Lyonnais.
DT> And with the Nikkei having risen around 28 percent since late April,
DT> there were growing concerns the rally may be too fast, with Japan's
DT> economic fundamentals still relatively weak and uncertainty remaining
DT> about the U.S. economy.
DT> "Everyone is starting to realise that this rise may have been too
DT> fast, but there still aren't a lot of sellers out there," said
DT> Hiroshi Sato, general manager at the equity department of Cosmo
DT> Securities.
Sounds to me like Sato-san wants to put on some shorts tomorrow.
^^_^^
Yes, the rise has been spectacular. Anyone who got in at a
reasonable time and who doesn't take huge amounts off the table here
is rather foolish, I think.
But . . . it does somewhat depend on your time frame, and your
expectations. If I was a buy-and-holder lucky enough to get in a
couple months ago, and thinking about 2010 or 2015, heck, I wouldn't
sell now either. The odds of a correction are high. The odds of a
total disaster now are much lower than they were a few months ago.
Long-term money is coming back in. The question is how much, and
what would it take to knock it back out.
Yuki
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