Prescottus porphyrogenitus …greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread |
Prescottus porphyrogenitus …By James Fairweather from Martin Currie Investment Management Ltd 08-31-2001
It’s baffling. After all, Canada cut its interest rates (to 4%) this week, and yet equities have still gone on down. Consumer cares. Annualised, Q2’s rise in US GDP = only 0.2%. But don’t panic: Bush is “deeply worried”, so it must be OK. Belgium’s economy has also shrunk, but no-one knew it had one. Swissair has cut 1,250 jobs from its workforce of 150. Anyway, Monday is US Labor Day’s holiday, so it will be Tuesday before we see volumes return. Sellers, or buyers?
If we knew that … What is clear from the plethora of this week’s numbers is that the Land of Liberty has cut inventory hard and fast. So production will be able to respond con amore to any improvement in demand. That will come. The question isn’t whether. It’s when. Secondly, some bellwether stocks – most recently Cisco and Intel - have seen a bottom and a vanquished moon. But others, like Sun Microsystems, are dawning doubters, still wondering whether the weather will improve. Markets need a clearer view from the corporate sector before they respond to improving economic news – like a fritzy Ifo index in Germany. But until then, there is no-where to hide. Outperforming the US market this month? Japan – with the Nikkei below 11,000. So we seek the consolations of poetry. Not Pam Ayres, nor Hillaire Belloc and certainly not Wallace Stevens, but the late and much lamented Malcolm Bradbury:
“There’s a new poetic in the air
It’s called the verse of Tony Blair.
It shows the spirit of the times,
It lilts, it plods, it’s bland, it rhymes.
It’s full of fine new Labour notions,
It’s not obscure like Andrew Motion’s …
Remember, it could be far, far worse:
They could get Prescott writing verse.”
Japan – A dastard a day …
Yesterday was nasty. Steep falls in industrial production and retail sales in July have pushed Japan closer to recession, figures showed. Because of the slump in global demand for semiconductors and electronics, industrial production dropped 2.8% in July, its fifth consecutive monthly fall. Meanwhile retail sales fell 2.7% in July, the fourth monthly decline. Then came more reports of redundancies, including 10,000 at Kyocera, the world’s largest maker of integrated circuit ceramics, and 2,200 at Oki Electric Industry, a telecoms equipment maker.
Well, the long and the short of it? This all cheered our man Thomas and his team – even though they’re making good absolute money for you, our liege lords, in their hedge fund (this week through $40 million, and rising). But then the government said it expects a shortfall in tax revenues, because of the economic slump. We sighed. When the next government announcement said it was “stepping up” to 12, yes 12 shelters, its programme of building shelters for the unemployed and homeless, we cried.
This all came on top of financial services minister Hakuo Yanagisawa’s heartening honesty. He said it will take seven years to cut Japanese banks’ bad debts in half: that’s double previous government postulants. He picked his time, did the hapless Hakuo, and managed to overshadow the only piece of good news this week: a government plan to stimulate the stockmarket by cutting capital gains tax on share trading from 26% to 10%. This would help – but the government seems to have failed to notice that, ah, unfortunately no-one is trading.
What are we doing amid the mayhem? Checking and re-checking earnings. We don’t want to own a stock which hits us with a revision. So the team are talking to all the companies we own. We ask ‘em in English – and then again in Japanese. Fortunately, our core is midcaps and defensives. Insurance, for example, is holding up: Mitsui (we’ve just bought more) and Tokio. Rates are rising, and companies are cost-cutting and/or merging. Consumer finance – we own Aiful, Takefuji and Credit Saison – continues to do well. The sector’s earnings are solid, as are those of certain trading companies like Sumitomo Corp. Meanwhile, corporate restructuring continues. Denso, the Toyota subsidiary, has just said it will buy back 5% of its shares. And the market? Koizumi could fix this. He has to. Hai.
http://www.investavenue.com/article.html?ID=2216
-- Martin Thompson (mthom1927@aol.com), August 31, 2001
porphyrogenitus- Constantine VII, Emperor of the East 905-959 according to my dictionary.
-- Martin Thompson (mthom1927@aol.com), August 31, 2001.
The interesting (albeit obscure) things I am learning on GICC today!!! Not sure I understand fully the reference, but thanks for looking it up.I ask you, where else on the web can you get this mix of information?
-- Andre Weltman (aweltman@state.pa.us), September 04, 2001.