Opinion

James Saft

Weak yen a boon for investors, not Japan: James Saft

May 14, 2013 04:03 UTC

By James Saft

(Reuters) – Buy Japanese stocks if you must but don’t expect Abenomics and the fall of the yen to revitalize Japan’s economy.

The yen has fallen by more than 20 percent since Prime Minister Shinzo Abe, who advocates aggressive monetary and fiscal policy, was elected in December, busting through the 100 yen to the dollar level last week.

In part the theory behind Abenomics is that a weaker yen will revitalize industry, which will export more and plow the proceeds into hiring and capital investment.

The stock market certainly believes: benchmark shares in Tokyo are up 36 percent this year and more than 68 percent over six months.

But a look at the actual data shows Japanese companies, like British ones during a similar bout of currency weakness in 2008, appear to be more eager to use a newly competitive currency to pad profits through higher margins rather than higher export volumes.

Mom-and-pop indicator implies headroom for stocks

May 8, 2013 19:45 UTC

NEW YORK (Reuters) – This is not your parents’ bull market.

In fact, your dad and mom very may well have abandoned the market entirely. That could be the single best indicator that stocks have room to run.

The Dow Jones industrial average closed above 15,000 for the first time on Tuesday, the same day the S&P 500 made its all-time high for the fourth consecutive trading session.

You can argue all you like about how corporate profits are vulnerable and the market is hung from the clouds on slender threads spun by Ben Bernanke, but what you can’t say is that we are in classic broad-based stock market mania.

SAFT ON WEALTH: Mom-and-pop indicator implies headroom for stocks

May 8, 2013 19:42 UTC

NEW YORK, May 8 (Reuters) – This is not your parents’ bull
market.

In fact, your dad and mom very may well have abandoned the
market entirely. That could be the single best indicator that
stocks have room to run.

The Dow Jones industrial average closed above 15,000 for the
first time on Tuesday, the same day the S&P 500 made its
all-time high for the fourth consecutive trading
session.

You can argue all you like about how corporate profits are
vulnerable and the market is hung from the clouds on slender
threads spun by Ben Bernanke, but what you can’t say is that we
are in classic broad-based stock market mania.

UK’s long wait – for Carney and recovery: James Saft

May 7, 2013 18:59 UTC

May 7 (Reuters) – Britain may well come to regret the
exceptionally long gap between Governor of the Bank of
England-to-be Mark Carney’s appointment in November and his
first day on the job in July.

Widely seen as a central banking superstar (a role not
without its dangers), Carney is credited with helping to steer
Canada’s economy through the financial crisis and its aftermath
with its banking system and reputation intact.

But one cost of bagging Carney as the successor to Mervyn
King was a very long run-in of more than seven months, during
which Britain has lurched towards and away from recession all
the while giving the impression of an economy more punch drunk
than strengthening.

Column: UK’s long wait – for Carney and recovery

May 7, 2013 12:06 UTC

By James Saft

(Reuters) – Britain may well come to regret the exceptionally long gap between Governor of the Bank of England-to-be Mark Carney’s appointment in November and his first day on the job in July.

Widely seen as a central banking superstar (a role not without its dangers), Carney is credited with helping to steer Canada’s economy through the financial crisis and its aftermath with its banking system and reputation intact.

But one cost of bagging Carney as the successor to Mervyn King was a very long run-in of more than seven months, during which Britain has lurched towards and away from recession all the while giving the impression of an economy more punch drunk than strengthening.

Column: An extraordinary summer

May 2, 2013 19:51 UTC

By James Saft

(Reuters) – Put away the sunblock and beach towels, for central bankers this is going to be yet another summer of extraordinary measures.

Major central banks around the world, struggling with low growth and sagging inflation, seem to be moving towards joining their peers at the Bank of Japan in considering even more radical measures to stimulate growth.

The European Central Bank on Thursday cut interest rates and threw out broad hints about a range of unconventional measures it may pursue, without committing to anything specific. Europe’s central bank also cut its main interest rate by 25 basis points to 0.50 percent and lopped a half a percentage point off of its marginal lending facility, taking it to 1 percent.

Column: Rwanda, iBonds and the madness of the bond market

May 1, 2013 18:08 UTC

By James Saft

(Reuters) – In the past week we’ve had two object lessons in the madness of the bond market: Rwanda and Apple.

Apple Inc, maker of the ubiquitous iPhone and iPad, on Tuesday sold $17 billion of bonds, the largest-ever corporate issue, at rates of interest barely discernible with the naked eye.

Also recently, Rwanda issued a debut $400 million Eurobond in a sale that was heavily oversubscribed. As the market has taken to calling Apple’s issue iBonds, you could easily call Rwanda’s 10-year offering aidBonds, as foreign aid is one of the largest sources of government revenue for the tiny African country.

SAFT ON WEALTH: Rwanda, iBonds and the madness of the bond market

May 1, 2013 18:01 UTC

May 1 (Reuters) – In the past week we’ve had two object
lessons in the madness of the bond market: Rwanda and Apple.

Apple Inc, maker of the ubiquitous iPhone and iPad,
on Tuesday sold $17 billion of bonds, the largest-ever corporate
issue, at rates of interest barely discernible with the naked
eye.

Also recently, Rwanda issued a debut $400 million Eurobond
in a sale that was heavily oversubscribed. As the
market has taken to calling Apple’s issue iBonds, you could
easily call Rwanda’s 10-year offering aidBonds, as foreign aid
is one of the largest sources of government revenue for the tiny
African country.

Earnings’ fun-house mirror: James Saft

Apr 30, 2013 12:09 UTC

By James Saft

(Reuters) – U.S. corporate earnings appear as if reflected in a distorting fun-house mirror: profits are huge but revenues strangely shrunken.

Corporate profits have grown strongly, up 2.1 percent among S&P 500 companies reporting first-quarter earnings so far, with 70 percent exceeding analysts’ expectations. At first glance, that looks like a particularly good outcome, especially considering profits compared to the size of the economy are near recent all-time highs. Revenues, however, are falling; down 0.6 percent compared to a year ago, marking the second quarter out of three that cash coming into corporate coffers has shrunk.

Understanding how this unsustainable state came to be and how long it might go on is the key to knowing not just what will happen with stock markets but perhaps with the economy itself.

Column: BRICs hit the wall – restructure, or recycle?

Apr 25, 2013 19:55 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – It may be time for emerging market investors to acknowledge the truth: the problem is not just cyclical, it is structural.

One of the puzzles of recent months is the underperformance of emerging markets compared to the rather more sclerotic and central-bank dependent developed world. Thus far this year emerging market stocks are down about 6.5 percent and trail developed market indices by a full 11 percentage points.

Given that growth in emerging markets seems to have bottomed late last year, you would normally expect the reverse, accompanied by strong commodity markets prices and supportive central bank policy.

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