Many Many things to discuss, upon recently enlightenment, I have decided to expand my views abroad. I have taken an interest in Asian Markets, specifically Japan and Vietnam. Firstly I feel obligated to discuss our domestic markets, as promised of yesterday, and perhaps if fatigue not win me over, i will venture to discuss my premature developing knowledge on Japan, and hopefully to discuss Vietnam tomorrow.
Surprise Surprise, wall street finally fancied that they were once again engaged in the possibility of dreaming and the possibility lingers that no cut will occur (as reflected in this down day). though a good number still are betting between a .25 or .5 rate cut. As yesterday i had forgotten to mention the recent rallying in the bond market promptly spurred refinancing in mortgages, which can only been seen as small bullish step. Though as people started finally seeing the light, interest rates have increased. Actually seeing my folly now, i should have realized my own words and trusted them to foresee this slight sell off. In the equity markets, there are slight moves of up and down days, nothing too drastic, i can only see this as upward bullishness heading towards resistance once again. Considering todays news it would seem the bears are loosing some traction. On closer technical inspecting, there appears to be more downside momentum on the S&P 500, I feel this would only be worrisome if short term horizontal support was broken around 1450, which is a significant drop from 1476. If one were to perhaps purport what this to be fundamentally, one can say that tomorrow the feds will hold and cause a sell off. Looking at the economic calendar, Housing should be another big mover, unless already priced in, but as the markets appear to be reacting on news, i cannot help but feel volatility will be a factor in tomorrows trading day. Also another aspect to consider is the retail aspect, Perhaps tomorrow should be a reasonable day, a down day but not too significant, as i consider retail should be able to maintain too similar conditions before or slightly better. As i expect the PPI will show some signs of inflationary pressures and hence more reason for the Feds to hold. Thus further weakening the dollar vs the yen and euro. Already the dollar has weakened vs the yen since the recent selling of yen by domestic funds considering the resilience of Japaneses markets to this "credit crisis." Auto sales are not as bad as they may seem, though those recent strikes with GM certainly didn't help volatility. Again with the Job market one cannot expect it to be so resilient for so long and expect it to show any signs of negative deviations of past performance. In general, we are comparing our past expectations which are significantly higher than the norm and so i feel in that respect the job market is not too terrible but not great either.
With commodities:
Oil, as i predicted would top, though my top was off by $1.00+ or so. As a relief, it may appear that this is positive for containing inflation, but i would argue that the Gold Markets says otherwise. Then again others can argue that the Gold Market in regards to inflation and the domestic equity markets have not had a solid correlation for sometime. But i feel that with the legitimate fears in the market that this move in Gold is no surprise and people surely do feel that inflation is not totally benign. In general, commodity prices have been going up and up, i mean as i said before i discussed with my local pizzerias and they keep telling me that the prices of where they get their materials keep going up and thus they pass it on to the consumer. Which in part also leads me to believe that the PPI report will follow suit to my argument that inflation is still prevalent. Also, to go along with this is that, yes, while people are still spending money, it is primarily the middle class continuing the drive in growth. The high oil and gasoline prices may have some affect but no significant in my opinion, every weekend even on weekdays the malls and all shopping plazas are filled with cars upon cars. Though as many kids return to school, this may have some affect on energy prices. While higher energy prices do not matter for a good number of middle class consumers, it will show a slight slow down as reflected in the recent down trends in retail.
*one more thing on oil:
The summer season approaches an end. This can be part of the reason why there is a slight decline, what would really surprise me is if oil continues to rally through October! Though with the majority of people following seasonality will be more geared towards shorting or having short positions on oil, and looking towards heating oil. Though is very possible that warm weather persist, or news of the oil supply being disrupted and hurricane problems keep oil in the 70-80's range.
In other respects for producers, they maybe feeling the squeeze in a different sense. Corn prices... Well lets see what corn is used for.... feeding live stock, food obviously, candy, corn oil, and in large boosting the price of this commodity is demand for biofuels. Obviously there are more uses but I'm sure by examining these parts tied with corn we can get a general idea of the situation. Because many farmers are now turning over lands to convert to corn production prices are being increased. Anything tied to this will follow suit, and for countries who are highly dependent on foreign imports for food will also be feeling this price increase (ex. japan). Its also to consider that in general, demand for things like corn from emerging countries have not disappeared, but may have slowed due to higher prices since the summer or something along the lines of that. At any rate one can see the relation, Corn price go up, producers in economies have to pay more, and pass it on to the consumer, this can be perceived as inflationary. I am moderately bullish on corn. Though, my argument for inflation may be far fetched.
Enough about the domestics, 12:49 a.m.
As i do not know too much about Japan, other than the average stereo types i have familiarized myself with its culture through years of indirect and somewhat direct research. As a kid i studied the martial arts of Karate for 11 years. As of recently I have been following the film industry from the very old to the very new, such as films of Akira Kurosawa. The expression of the ideas of the samurai, warrior culture, handwork and loneliness all explored. Also i started seriously engaging in anime for the purpose of gaining insight on language and culture. By specifically picking the correct anime, especially the ones pertaining to school life and city life, one can derive vague generalities that cannot be taken seriously, but yet still hold some truths. It is as if one studies the bible, he or she does not take every word literally. The various regions dialects and accents are ever prevalent in anime, how schools work, how students interact, festivals and celebrations, holidays, are part of the culture that can not lie when i watch it so in anime. Also the themes explored in these animes shows the thought of what Japaneses choose to express, just how American media and movies a reflect a way of American thought. The danger lies in that people expect to find japan to be like anime when that can be father from the truth. In fact reality, is never anything like TV EVER, and one has to keep this in mind at all times. The history of Japan shows a race of hard working people who value the ethics of working hard and doing so. Honor family discipline... etc... And there are so many things i do not know will not ever know do to the fact that i am a foreigner. But as it may be, i will still endeavor to continue my studies of this foreign culture, As of now i continue as the aforementioned and will engage to studies further of the history particularly the 1980's and or the 1950's onward. I have tried my best to convey my biases and what little i know of Japan, Read onward with discretion(If i come off as ignorant and offensive i apologize, but i cannot apologize for being who I am, I was born an American and simply can be nothing else but so):
Random thoughts to be reorganized later:
An aging population with lots of money exists in Japan. Many of these people do not know where to put this money. Many possibilities can arise, similar to any other aging nation such as America, though to the extent of people and amount of financial capital is quite different (also ideas of materialism).
The BOJ decision to hold pending the US fed's decision: So if there is a cut a rally, dollar further weakens yen strengthens. This good for US exports bad for Japan exports, and already this is not helping the inflationary pressure japan already feels. I don't think the BOJ will raise rates, but will also hold if anything.
The financial markets of Japan slightly trouble some, but are better off than most of the Global markets, in terms of shock to the Credit problems. Housing, is not terrible but not in doing amazing. I feel this can only be good if housing is steady and moderate, considering the small fixed amount of land available on the Island, and the growing population of Old. What maybe troublesome is that the youth will be fleeing japan eventually seeking opportunity elsewhere.
Political intrigue is never a dull drum these days with Japan, whoever steps up from ABE will sure have a lot to work with in bettering japans economy for the future. Politically whatever turns out will be significantly felt through the financial markets of Japan.
Enough for tonight.... Vietnam tomorrow
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