All Topics / Overseas Deals / Japan (and its Real-Estate market) Rides Again

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  • Profile photo of FreckleFreckle
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    Contradictions?  I've always had a consistent view of India and never been that enthusiastic about the "emerging markets will provide a growth engine to support the global economy" meme. Especially the muppets who thought India was the next big thing after China. The hot FED money that provided access to cheap credit that fueled EM growth is now flowing the other way leaving EM economies with a Current Account problem. India's political machine coupled with it's insane bureaucracy were always going to be impediments to progress. Couple that with an insatiable demand for gold leaves India with some serious economic headaches to sort out. 

    However, India is but one economy amongst many in Asia facing these problems. A point you seem to have ignored in our recent debate. The Asian crises will still linger in the memories of many Japanese I suspect.

    As far as the Japan 4th comment I was surprised to run across that little snippet. Does this mean Japan is falling behind or others surging ahead. For a country that was not so long ago number 2 forth represents a mighty fall. 

    As sure as God made little green apples Japan is slipping. Using PPP and comparing Japan from the 1990's it's fairly obvious Japan is loosing the battle to get it's economy under control and moving in line with other comparable countries.

    Profile photo of FreckleFreckle
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    Ziv wrote:
    Your point? Incidentally, when did you move from "Japan is doomed" to "Asia is doomed"? Or is this part of the general "the world is doomed" theme?

    Busted!!

    Iceland

    Greece

    Spain

    Portugal

    Ireland

    Argentina

    Venezuela

    Italy

    France

    descending into the economic meat grinder..

    India

    Indonesia

    Philippines

    Brazil

    China

    Japan

    Russia

    UK

    US

    Euroarea: 92.2%, up from 88.2% a year ago

    Greece: 160.5%, up from 136.5% a year ago

    Italy: 130.3%; up from 123.8% a year ago

    Portugal: 127.2%, up from 112.3% a year ago

    Ireland: 125.1%, up from 106.8% a year ago

    Spain: 88.2%, up from 73.0% a year ago

    Netherlands: 72.0%, up from 66.7% a year ago

    Total debt % GDP

    Yep it's all good. Nothing bads going to happen here. Carry on as usual. I must remember to tell my kids that debt is good.

    Profile photo of FreckleFreckle
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    On the Bass thing how about finding something that is up to date. Those comments are over 12 months old. The situation is considerably different and still fluid at this point. Bass has something like $1.5B under management. He has more trades going than you can poke a stick at. Some are up some are down. In two months things could be completely different again. Simply because Bass' Japan trades are or were underwater at one point in time indicates nothing. His past blockbuster trades went through the same process so excuse me if I don't slash my wrists just yet.  My guess is that given the yen has moved considerably since then and interest rates and JGB's have headed south then it's quite possible Bass is sitting on a win at this point. Still a long way to go on this play yet.

    Profile photo of FreckleFreckle
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    Self explanatory….

     

    Profile photo of FreckleFreckle
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    Ziv wrote:
    When Abe wants to create inflation and growth, corporations comply and raise employee wages IN ADVANCE of such occurrences,

    Huh???????? Who's kidding who here?

    The problem with this so called wage growth is that total wages are falling with a shrinking work force…

    UBS AG analysts said Japan’s shrinking labor force means salaries need to rise even more to prevent total wages from contracting and damping consumer spending capacity. The aggregate wage level may not rise even with wages growing 1 percent per worker, Hong-Kong based economists Duncan Wooldridge and Silvia Liu wrote in a May 23 report.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Quote:
    …UBS AG analysts said Japan’s shrinking labor force means salaries need to rise even more to prevent total wages from contracting and damping consumer spending capacity. The aggregate wage level may not rise even with wages growing 1 percent per worker…

    Funny you should choose this article, titled "Japanese Wages Gain in Boost for Abe Campaign to Reflate Economy" :) Maybe you missed the core of the article, which reads –

    Quote:
    Japan’s wages rose by the most in a year in April, a gain that supports Prime Minister Shinzo Abe’s campaign to reflate the world’s third-biggest economy after 15 years of falling prices.

    Monthly wages including overtime and bonuses rose 0.3 percent from a year earlier

    Also interesting how you don't mind quoting the same "BS MSM" articles that you so venomously attack when I quote. Hypocrite much? Here's another, more thorough analysis of the phenomenon  – basic essence – employers are cautious in raising base wages, which are far harder to scale down, but are more than compensating with bonus and overtime payments (which were unheard of in Japan until a couple of years ago) – Japan's Wage Data not All that Gloomy

    Quote:
    …nominal wages, or total earnings, inched up 0.4%, marking the second consecutive monthly gain. Behind the rise was an increase of summer bonus and overtime pay, brought about by a recovery in corporate profits and production.

    Many economists predict the trend will continue.

    “Since a recovery of industrial output looks set to gather pace, non-regular wages including winter bonuses are expected to go up,” said Kenji Yumoto, vice chairman of the Japan Research Institute. The weak yen should boost exporters’ earnings and also help the service sector as it draws more overseas visitors to Japan, Mr. Yumoto said…

    Speaking of visitors to Japan and industrial output, we just heard of the 2020 olympics to be held in Tokyo – yet further boosting to both. As for Bass – more and more of the world's economists are noticing the major missing links in his theory of doom and gloom – Cooler Heads: The Rebuttal to Kyle Bass' Japan Market Meltdown Scenario / JP Morgan's Jesper Koll & Masaaki Kanno

    Quote:
    …Koll challenges Bass’s “dump yen assets” call on analytical grounds.  Bass has not fully thought through some of his points, or has ignored contrary indications.  While Abenomics–with its 2% inflation target and further Keynesian deficit spending stimulus–could increase pressure for higher interest rates, there will be no crisis, and there may not be higher rates.  JGBs remain an attractive asset.  Koll suggests:

    •Rising interest rates would of course raise debt service costs for all borrowers, and especially the hugely indebted government.  But they would enable lenders–including household depositors–to charge higher rates on new debt and raise returns on non-fixed rate debt.   Since net stock of private savings is larger than the net stock of public sector liabilities, Koll reckons that the overall effect on the economy would be positive.

    •Rising interest rates would not spell large losses for Japanese financial institutions because these institutions’ bond–and especially JGB–portfolios are largely held to maturity, avoiding the requirement to be marked to market.  The institutions would have no incentive to sell, and ample incentive to hold the JGBs [the weighted average duration of which they have in any event been shortening to well under five years–Harner].

    •As to who is or would buy JGBs, the answer for the present and foreseeable near term future is:   the Bank of Japan.  BOJ is already committed to buying the entire debt out to a maturity of three years and a new governing board to be installed in April may extend the range to three to five years.  Interest rates will rise only as much as BOJ will allow.  This is why foreigners and domestic institutions are still buying the bonds.

    •Whether or not significant inflation develops in Japan depends on productivity.  Significant increases in productivity could fully mitigate inflationary pressures.

    •There is plenty of room in Japan’s economy for raising productivity.  Agriculture, in particular, has absymal productivity that could easily be raised through deregulation.  Land policy that affects housing is another.  Health care is another.   Indeed, deregulation is needed throughout the economy. The Abe administration must implement real deregulation, so that private investors put their savings and capital to work, by building new factories, new hospitals, and so forth….

    And meanwhile – Japan's GDP Revised Up – AGAIN 

    Quote:
    Japan’s economy expanded much faster than initially expected in the second quarter, adding to growing signs a solid recovery is taking hold and heightening the case for Prime Minister Shinzo Abe to proceed with a planned sales tax hike next year.

    A marked improvement in capital expenditure led to an upward revision in April-June gross domestic product (GDP) to an annualized 3.8% expansion from a preliminary 2.6% increase, data released by the Cabinet Office showed on Monday.

    The expansion, which roughly matched a median market forecast for a 3.7% increase, underscores the strength of Japan’s recovery and boosts the chance the government will proceed with a two-staged increase in the sales tax.

    It was the third straight quarter of increase following a 4.1% growth in January-March.

    On a quarter-to-quarter basis, GDP growth was revised up to a 0.9% increase from a preliminary 0.6%.

    Japan emerged from recession in 2012 and data for much of this year has shown the benefits of Abe’s reflationary policies and the BOJ’s aggressive stimulus…

    Japan's Quarterly Commercial Real-Estate Sales Soar 78%

    Quote:
    Prime Minister Shinzo Abe's plans to radically overhaul the economy, known as 'Abenomics' involve aggressive monetary policy, fiscal stimulus and structural reform, and have so far worked to dramatically boost economic sentiment in the country.

    In particular, the Bank of Japan's decision to bolster its holdings of real estate investment trusts (J-REITs) by 30 billion yen ($301.6 million) to 140 billion yen in 2013, as part of its $1.4 trillion asset purchase program unveiled in April, has provided a strong boost to the commercial real estate market, the report found…

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Wages;

    Monthly wages are down… 14 straight months. Beware of nominal Vs real wage growth. Bonus payments are up but regular monthly payments are down. Negative wage growth is not reversing. Total wages paid out are also trending down due to a shrinking work force. 

    GDP:

    GDP is up more than expected. Go look at any country who plans to raise consumption taxes and see what happens to GDP. You get a positive spike on pull frward spending by consumers to save on the new tax. You get a recession afterwards. 

    Olympics:

    Too far away to have any immediate affect but expect to see property speculation ramp up going forward. Fukushima is the fly in the ointment. Things don't get sorted there the Olympics could be a disaster. Economically it may actually produce very little.

    Dr. Allison Stewart, who has conducted exhaustive economic research on the Games since 1960 for Oxford University’s Saïd Business School, said there was no evidence to suggest any Olympics had ever resulted in a positive cost benefit.

    Koll:

    Koll conveniently ignores who will hold JGB's when inflation is 2% and bonds are paying sub 0.8%. He assumes the BOJ will be the buyer of last resort and will soak up surplus bonds. Good luck with that. He also fails to explain how lower bond prices impact on bank reserves.

    Significant increases in productivity could fully mitigate inflationary pressures – 

    There is no "significant" ​ potential remaining in the productivity stakes. Since the 90's Japan has rung more productivity out of the system than anyone else. There is a point where no more or little productivity remains to be realised. 

    Keep looking for someone credible enough to counter Bass's arguement.

    BS MSM:

    When I pull from the MSM I try to refer to actuall facts in an article as opposed to editorial or opinion pieces. It's relatively easy these days to discern industry or politically motivated opinion peices masquerading as ligitimate information. 

    Bass puts his money and reputation where his mouth is. Koll doesn't. I don't necessarily agree with everything Bass says. No one is right all the time about everything. 

    This debate is fairly simple. Can you expand debt faster than income indefinitely and still survive. We all know how Ponzi schemes work and consequently know the answer to that.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Quote:
    Bonus payments are up but regular monthly payments are down…

    As demonstrated above, the total average PER PERSON is up – they're simply doing it via irregular payments, to prevent a non-reversible premature raise – cautious, but works.

    Quote:
    …Total wages paid out are also trending down due to a shrinking work force

    Has nothing to do with the fact that total wages average per person is rising, as requested by Abe and performed, to the best possible extent cautious corporate management can allow themselves to do. As for the shrinking work force and the plan to counter this phenomena – already discussed to death above, no point in re-iterating.

    Quote:
    …positive spike on pull frward spending by consumers to save on the new tax. You get a recession afterwards…

    Maybe, maybe not. Here it's coupled with the best business sentiment and increase in household spending the country's seen in close to 20 years, so I think the result will be quite different. In any case, we're both speculating here, yourself included.

    Quote:
    …Fukushima is the fly in the ointment. Things don't get sorted there the Olympics could be a disaster…

    We're in complete agreement there. 

    Quote:
    …Economically it may actually produce very little… no evidence to suggest any Olympics had ever resulted in a positive cost benefit…

    I'm not talking about a positive cost benefit, I'm talking about production, business and individual sentiment, a boost to international relations and business connections, and a host of other benefits, that may be non-quantifiable directly (kinda like cancer rates 40-50 years post-nuclear spillage), but are nonetheless quite tangible and positive for the economy and the people that make it or break it.

    Quote:
    …Since the 90's Japan has rung more productivity out of the system than anyone else. There is a point where no more or little productivity remains to be realised…

    Complete bollocks, pardon the expression. While Japan's machinery, automotive and robotics industries are indeed highly productive, it's agricultural, financial, energy, retail and electronics sectors are anything but. Do some reading, please. 

    Quote:
    Keep looking for someone credible enough to counter Bass's arguement…

    Don't need to, the market itself is doing the talking and proving him wrong, as the host of "smarter-than-thou" would be speculators that came before him and coined the "widowmaker trade" phrase have proven time and time again. These days everybody who's worth their mettle, from Soros to GS, are voting with their dollars against his half-baked gamble.

    Quote:
    I don't necessarily agree with everything Bass says. No one is right all the time about everything…

    OMG, a crack in the Freckle "know it all" facade??? What's the world coming to???

    Quote:
    …This debate is fairly simple. Can you expand debt faster than income indefinitely and still survive

    No, that's not what the debate's about at all, since no one's trying to "expand debt faster than income" – what Japan's administration is doing is attempting to INVEST in its growth and kick-start an economy that's been dormant for two decades, with wiser policies than those that have been tried (and failed) here, and in many other parts of the world as well, whether you like it or not. But you're so horrified at the idea of being wrong, that you (and others like you) keep trying to dumb down the debate to "Spend, spend, spend". In spite of this, it gets alot more complex and carries alot more merit than that.

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Ziv wrote:
    No, that's not what the debate's about at all, since no one's trying to "expand debt faster than income" – what Japan's administration is doing is attempting to INVEST in its growth and kick-start an economy that's been dormant for two decades

    ROFL…said like a true Keynesian Krugmanite.. opinion and rhetoric override empirical data. 

    Quote:

    no one's trying to "expand debt faster than income"

    Yep somebody's making all this up to make them look bad LOL

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    BNP Warns Only 10% Chance That Abenomics "Ends Well"

    Japan’s core CPI (which excludes perishables) surged 0.7% y/y in July, but the upturn is largely due to higher prices for energy that reflect rising import prices due the yen’s weakness. Despite global exuberance at Abe's "progress", BNP notes that there are still no signs of price growth for rent and service prices, factors behind Japan’s protracted deflation. Crucially, BNP believes that Abenomics could lead to four possible medium-term outcomes: (1) Continued deflation (35% probability), (2) Financial repression (40%), (3) High inflation (15%), and (4) Happy end to deflation via revived trend growth (10%).

    Via BNP Paribas

    Which is really no chance at all truth be told. I thought 10% was optimistic.

    Profile photo of FreckleFreckle
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    A BOJ survey now shows consumers are catching on to Abenomics. As I mentioned a while back I expect his popularity to go into terminal decline over time as his policies hit the reality wall.

    BOJ Poll: Japan Consumer Confidence Slips on Lower Income

    The average household spending fell a real 1.6% on year in August, marking

    the first y/y drop in two months after a 0.1% gain in July. The average real

    income of salaried workers' households fell a real 0.9% on year in August,

    the first fall in six months while their disposable income also posted the first

    drop in six months, down 1.4%.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    "Slipped" is the right term indeed – I think it's quite a manageable slip, considering July's numbers – 

    JAPAN CONSUMERS HAVEN'T BEEN THIS CONFIDENT IN 7 YEARS

    sorry, freckle, doing my best to keep up with your couch commentary, but busy here in the real world, with all the "idiots" who have been netting handsome profits here in Japan while you moan and groan from your precious metals hoard stash ;) 

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of EngeloRumoraEngeloRumora
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    zmagen wrote:
    "Slipped" is the right term indeed – I think it's quite a manageable slip, considering July's numbers – 

    JAPAN CONSUMERS HAVEN'T BEEN THIS CONFIDENT IN 7 YEARS

    sorry, freckle, doing my best to keep up with your couch commentary, but busy here in the real world, with all the "idiots" who have been netting handsome profits here in Japan while you moan and groan from your precious metals hoard stash ;) 

    OK, this was a funny post.

    Keep it up guys.

    The 2 most active posters in the "overseas section"

    Where is everbody?

    Thanks :)

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    Profile photo of FreckleFreckle
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    zmagen wrote:
    "Slipped" is the right term indeed – I think it's quite a manageable slip, considering July's numbers – 

    JAPAN CONSUMERS HAVEN'T BEEN THIS CONFIDENT IN 7 YEARS

    sorry, freckle, doing my best to keep up with your couch commentary, but busy here in the real world, with all the "idiots" who have been netting handsome profits here in Japan while you moan and groan from your precious metals hoard stash ;) 

    ROFL…. still trying to make a silk purse out of a sows ear Ziv. A quote from the report you provided:

    • Japan's consumer confidence index rose five points to 78, its highest reading since the first quarter of 2006, according to Nielsen's quarterly survey of consumer confidence and spending intentions.

      However, that figure still trails behind the global average of 94. Index levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

    Interesting what the report says about SEA in general with Indonesia having a very high confidence score. The report suggests a growing middle class is fueling growth. Brazil had a very similar profile over the last decade and is now running into big problems. Consumers simply leveraged up to buy consumer goods. That gave the impression of a buoyant vibrant economy. If SEA doesn't achieve a concomitant increase in productivity it may well find itself in the same boat as Brazil. Throw a FED taper in there (or even the hint of one) and capital flows will reverse faster than you can say Freckles a legend. That indicates how exposed to a crises SEA is.

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    zmagen wrote:
    but busy here in the real world, with all the "idiots" who have been netting handsome profits here in Japan

    I thought it was a  bit harsh describing your clients as 'idiots'. Is that all 5 of them or just a few in particular. ;-)

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Aaaawww, touched a sore spot, have we? Grow up, freckle, the world sucks – not everybody thinks you're a genius. Love how consumer confidence is a good indication when it slips, but a sows ear when it's high, incidentally. Hypocrite much? ;)

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    zmagen wrote:
    Aaaawww, touched a sore spot, have we? Grow up, freckle, the world sucks – not everybody thinks you're a genius.

    Weather's lousy here and I'm a bit bored truth be told. When you play the man I know I hit the spot LOL. Luv it when you bite ;-)

    Quote:
    Love how consumer confidence is a good indication when it slips, but a sows ear when it's high, incidentally. Hypocrite much? ;)

    Japanese consumer confidence or more accurately pessimism hasn't actually been in the optimist zone since early 06 and then only briefly. The poor old Japanese consumer has been in pain for decades. From moment to moment it's just a matter of how much.  Abe's managed to give the consumer some respite in the form of a psychological lift but that's unlikely to translate into broad tangible benefits for the populace at large but I do hear Lamborghini expect to increase sales by 30% to filthy rich courtesy of Abe and the BOJ.  

    Iabove 50 indicates optimism, below 50 pessimism)

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Ain't no troll like a morning troll. :) would love to stay and chat, but have to head out to the airport to meet a Swiss banker who's bringing a group of Singaporean and Thai "filthy rich", as you rudely label them, to invest in the world worst economy. Maybe later, good luck with the boredom till then. (With any luck, our client database may just increase to six. I'll be sure to mention freckle said they should get back on the plane and head back home as soon as I see them. After all, he knows best.)

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

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