Enron Mail

From:leann.walton@enron.com
To:gary.hickerson@enron.com, vince.kaminski@enron.com
Subject:Magic 15,000 level on Nikkei
Cc:mraymon@enron.com
Bcc:mraymon@enron.com
Date:Thu, 26 Oct 2000 03:47:00 -0700 (PDT)

---------------------- Forwarded by Leann Walton/NA/Enron on 10/26/2000 10:47
AM ---------------------------
From: Darren Delage@ENRON on 10/16/2000 02:53 PM ZE9
To: Maureen Raymond/HOU/ECT@ECT
cc:
Subject: Magic 15,000 level on Nikkei

Maureen,

Hope all is well .Thank you for your coverage last week. I certainly
appreciate the value-added that you provide in your research.I had a quick
question for you regarding any anticipated Japan central bank intervention at
the 15,000 level in the Nikkei.
If I am understanding the mechanism correctly, BIS reserve requirements fall
below certain threshold and banks can no longer lend money and meet BIS
lending criteria due to improper reserve base. And this roughly happens at
15,000 level?

Reason I ask is Goldman Sachs put out an article suggesting that
break-evenpoint for bank holding of stocks is roughly 12,000-12,500 a
different index level than the one you have mentioned.


I can appreciate the difference between reserve liquidity and actual
break-even on equity positions, but just wanted to clarify this point with
you, as we are trying to gain a complete understanding of how a trigger would
effect Japanese capital markets. And so, as I currently understand it, there
are (2 ) trigger levels to watch:

15,000 where banks fail BIS criteria and hence cannot extend new loans with
BIS stamp of approval. Clearly ctl bank would have incentive in restoring
this or else financial system would be thrown into turmoil.

12500 where banks begin to take an actual loss on equity holdings

Is this right?



Thanks Maureen, take care,
Darren