The Smart Yen Is Ready

I attended a meeting of financiers in Tokyo that invite me occasionally for commentary on the U.S. markets. Before lunch, we heard presentations about the Nikkei’s prospects for the rest of this year. After lunch, we listened to projections for the S&P; 500. All presenters were Japanese.

While they think the current storm is worse than anybody thought a month ago, they also think it’s going to blow over. I’m in that camp as well, wishing I’d foreseen the market slide of the past month but not overly concerned about it lasting all that long.

My favorite observation on the Nikkei slide came from Shinnichi Ishinori of Imaichi Securities: “It won’t go below 12,000 and if it does, it won’t go below 10,000 and if it does that, it definitely won’t go below 8,000.”

Now there’s a man who knows how to place his bets! Getting below 8,000 would take the Nikkei to the lowest range it’s seen…ever. It hit 7,604 in April 2003. Mr. Ishinori’s forecast is akin to me saying that the Dow “definitely won’t go below 5,000.” Of course not.

More interesting than any presentations, however, were the whispered conversations of our 90-minute lunch. There, I learned that all three of Japan’s biggest banks are ready to pour money into America’s troubled financial sector. That’s just the latest evidence of smart money from around the world pouncing on the U.S.A. winter sale.

Mitsubishi UFJ, Mitsui Sumitomo Financial Group, and Mizuho Financial have pooled $10 billion that they want to put to work outside Japan’s stagnancy. Just five years ago, the Japanese government had to bail out these same banks for problems that started in the early 1990s. Now, that bail-out money is fully repaid and investors here are riotous in their demands for the banks to find some decent places to put new cash to work. Enough with going nowhere, they’ve decided. Let’s get where the action is.

The big three are serious enough in their intent to own part of America’s dynamic financial system that they’re prepared to go head-to-head with sovereign wealth funds in other parts of Asia that are aching to snatch a share of Wall Street.

For about the past six weeks, we’ve seen foreign money gushing into America to buy portions of semiconductor stocks and distressed banks. That the latest posse includes banks from Japan, a ground zero of financial disaster history, shows that those with experience in these matters sense more opportunity than danger.

The collective stance looks to be, “This too shall pass, and when it does I want to own as much of the recovery as possible.”

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • The Kelly Letter
    A Complete Investment Management System
    The Kelly Letter  every Sunday morning by email.
    Like no other. Many subscribers say this is the best read of their week, astonishing in its ability to distill seven days of noise into one succinct overview of the very few items that might matter. Start your Sundays right!
    A one-page Quick Start Guide
    with page number references to full information in The 3% Signal. You'll receive access to this right away so you can begin transforming your portfolio into a performance machine immediately.
    The 3Sig Calculator.
    A thing of beauty! You'll use it to generate your own personal signals every quarter including exact share amounts to buy and sell based on your account balances. It emails you the results to make later quarters easy by keeping last quarter's numbers at your fingertips. Some subscribers say this tool alone justifies their subscription price.
    The subscriber-only section of this website
    where likeminded investors are commenting on notes and discussing in forums. Jason joins these interactions every day. They're a treasure trove of investing tips and wisdom.
    The archive of Kelly Letter notes.
    It’s a research center, searchable and smartly tagged to make gathering time-stamped material on covered subjects easy.
    The subscriber podcast.
    Jason reads every letter word-for-word. This feature was requested by subscribers who prefer audio learning. They listen on their Monday morning commute, during a workout, or while reading along at their computer.

    Save 17%

    Pay as you go
    Or sign up to receive free email and learn more about the system.
Bestselling Financial Author