Nikkei Weekly Outlook: Earnings Clouds

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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. Continue reading

Nikkei Weekly Outlook: More Upside Post-Golden Week?

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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. Continue reading

Nikkei Weekly Outlook: 14,000 in Sight Pre-Golden Week

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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] Continue reading

Nikkei Weekly Outlook: Downside Risk Ahead of Earnings?

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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]] 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. Continue reading

Nikkei Weekly Outlook: Holding 13,000

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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 Continue reading

Nikkei Weekly Outlook: To 13,000 or Back to 12,000?

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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). Continue reading

Nikkei Weekly Outlook

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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

Is a Nikkei 225 Bottom Near?

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The Nikkei 225 has been a marked laggard compared to regional and global benchmarks over the past year. To make matters worse, the Nikkei fails to sustain rallies and faces ongoing sell pressure resulting in new multi-year lows of late (now at 2 years and 7 months). As of Friday’s (3/14) close of 12,241, the Nikkei is off nearly 17% in 2008 and that’s after a 12% loss in 2007.

N225 Chart - 03-14-08

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Nikkei Weely Outlook [Note: TSE Closed Monday 12/24]

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Japanese stocks continued to face selling pressure last week (-1.7% on the week) until a sharp reversal during the morning session on Friday. In fact, the Nikkei 225 fell below 15,000 early Friday and was in a six-session losing streak until a fractionally higher close Thurs. The N225’s Fri. close of 15,257 doesn’t leave much room for another possible drop below 15,000, especially considering the light trading expected for the week. Note, the Tokyo Stock Exchange is closed Monday for the Emperor’s birthday and Friday (the last day of trading in ’07) is a half-day. U.S. equities have a half-day on Monday and are closed for Christmas on Tuesday. Continue reading