Japan: Buy - SAMPLE REPORT

Admin — Tue, 23 May 2006 18:00:19 +0800

Tuesday, 23 May 2006

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Summary

The Economic Clock™ for Japan is still o k, but sector selection is getting sparse. So be alert when buying.

The Economic Time™

Monetary Economy:

Inflation stopped contracting last November. At 0.5%, food inflation is rising marginally "faster" than non-food inflation. Because of slow inflation, the Bank of Japan has allowed the monetary aggregates to keep expanding. Growth in reserve money is still increasing, albeit at 1%. Growth in M1 is the strongest of all the aggregates, while growth in M2 and in M3 is petering out. Lending is "racing along" at an annual 0.8%: banks are still nervous. Consumer lending is still contracting by over 30%, while housing credit is rising by around 6% and loans for equipment are growing by around 34% - all during Q405. Interest rates remain very low, although the yield curve is steepening because the long rates have nearly quadrupled since May 2003's 0.5%. The yen's exchange rate will hover around the current range. On a three month monetary policy view, tribal policy making will remain: the Bank of Japan may be worried about inflation, but the government is worried about growth and the Ministry of Finance is worried about servicing the public debt equating to 150% of GDP. So the tribe will keep rates low for a long time.

Enzio's Clock - Japan: Buy - SAMPLE REPORT - Comments

Japan: Buy - SAMPLE REPORT

Summary

The Economic Time™

Monetary Economy: