What to watch: Earnings season peaks with over 1,700 companies reporting this week; Monday, 5/12: Economy Watchers Survey - March (Cabinet Office); Money supply data - April (Bank of Japan (BOJ)); Wednesday, 5/14: Corporate Goods Price Index - April (BOJ); U.S. CPI - April; Thursday, 5/14: Machinery Orders - March (Cabinet Office); Mansion/Condominium sales - April (Real Estate Economic Institute Co.); Friday, 5/16: GDP - January to March quarter (Cabinet Office)

Ongoing: Earnings, earnings, earnings! And as always, external factors will impact domestic equities, most noticeably rising commodities (record oil) and a weaker dollar (stronger yen): ¥102.80 on Friday vs. ¥105.4 the prior Friday. [Read more →]

Thoughts on the Nikkei 225 Stock Average:

Japanese stocks have been rallying over the past several weeks and the benchmark Nikkei 225 Stock Average is now at a 2-month-plus high; the N225 recouped 14,000 last Friday in spite of thin trading of late, due to the extended holiday that continues through this Tuesday. Short-term, sentiment has improved drastically as buyers have emerged to pick up stocks with severely depressed prices and the kind of valuations that excite Warren Buffett; [Read more →]

What to watch: Monday and Tuesday, May 5-6: Nothing — TSE closed (trading resumes Wednesday); Earnings season also resumes; Friday, May 9: Index of Business Conditions (Cabinet Office)

Ongoing: As always, external factors will impact domestic equities; however at present, conditions seem favorable given the weakening yen (now around ¥105/$1) and an accommodative Fed on all fronts. Concurrently, that the Japanese government is protectionist or that the Bank of Japan is helpless seems to be beside the point. Meantime, the ongoing question is whether Japanese stocks represent true value or instead, if the apparent value is merely an unobtainable mirage for gaijin investors. [Read more →]

What to watch: Earnings reporting continues; JGB activity (unprecedented サーキットブレーカー (circuit breaker) action last Friday; rising yields but equity yields still attractive to the 10-year); Tues./Wed., April 29 -30: FOMC rate decision meeting; Wed., April 30: Bank of Japan (BoJ) monetary policy meeting; March - Industrial production; March - New housing starts; March - Unemployment and Ratio of Job Offers to Applicants; March - Household income and expenditure survey; U.S. Q1 GDP; Thurs., May 1: April - New auto sales; Fri., May 2: U.S. April - Unemployment and U.S. nonfarm payrolls

Ongoing: External factors, particularly U.S. earnings and economic data (see above) to influence domestic stocks; record commodities vs. weakening yen [¥104.5/$1 on Friday] [Read more →]

What to watch: Key earnings reports begin Wednesday 4/23; Friday 4/25: CPI for March (April for select metropolitan areas)

Ongoing: External factors will inevitably weigh on domestic stocks (bullishness in the U.S. helped pull the Nikkei up to a multi-week high by week’s end). [Read more →]

What to watch: Japanese earnings forecast (downward) revisions; U.S. earnings releases; Tuesday; 4/15 Mansion (condo) sales for March; Wednesday 4/16 U.S. CPI for March

Ongoing: External factors; Investors are apprehensive of bad news; General Electric (GE: 32.27 -0.98%) delivered worse than expected earnings early Friday, sparking a broad market selloff in the U.S. Shares of GE dropped nearly 13% or the whopping equivalent of about $47 billion in market capitalization! The direction of the yen will continue to be watched closely with the same knee-jerk reactions (weak yen = good; strong yen = bad) to be expected. [Read more →]

What to watch: Monday, 4/7: Cabinet Office’s Diffusion Index of Economic Indicators; Tuesday, 4/8: Cabinet Office’s “Economy Watchers” Survey; Tues-Weds. Bank of Japan Monetary Policy Meeting; Thursday, 4/10: Cabinet Office’s Machinery Orders for February; Friday, 4/11: Bank of Japan — Producer Price Index (PPI); Fri-Sat. G7 meeting of Finance Ministers [Read more →]

What to watch: Monday, 3/31: February Industrial Production; Tuesday, 4/1: Tankan (watch capex spending outlook and yen/dollar predictions — the FY07 second-half ¥/$ prediction for the December survey was 113.79 compared to 114.23-33 in the Sept. and Mar. surveys and a most recent quote of about ¥99). [Read more →]

Aside from comparatively low valuations (pe, pbr, etc) and high yields, two other positives supporting Japanese stocks at current levels are share buybacks and retiring of treasury stock. By way of an article published by the Nikkei on Sunday, the WSJ reports Tokyo-listed companies are expected to have canceled more than 1.11 billion shares worth sum ¥2.5 trillion ($25B), up 30% from the prior peak in fiscal 2006. Make no mistake, the timing couldn’t be better for firms to buyback and retire stock. Two companies mentioned in the article are Toyota (JP:7203) (TM: 101.31 +0.75%), which plans to retire the equivalent of 4.5% of shares outstanding and NTT DoCoMo (JP: 9437) (DCM: 14.93 -0.33%), which by our calculations plans to retire about 2% of shares outstanding.

What to watch: Monday, 3/24: Business Outlook Survey; Land Prices; Friday, 3/28: CPI

Ongoing: BoJ disarray (Nikkei reports results of a poll showing 41% of respondents blame LDP for chief-seat vacancy vs. 27% for DPJ); Pointless speculation of rate cut (next BoJ rate decision meeting April 8-9); Fukuda Cabinet support rate drops 9 points m-o-m to 31%; Subprime fallout again delays Mizuho Securities-Shinko Securities merger

Markets: Volatility likely to continue as external factors to weigh heavy; Stocks paying a year-end dividend go ex-dividend on Thursday, 3/25; Possible testing of 13,000-level for Nikkei 225 with month and fiscal-year end window-dressing expected, but likely to be challenged by profit-taking

Weekly recap: 2% weekly gain to 12,482; 7% weekly fluctuation, breaking the 12,000-level intra-week to a 2-year 7-month low; Foreign investors were heavy net-sellers two-weeks ago (highest since Black Monday) and net-sellers again last week despite Friday’s net-buying on a broad rally