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Enron Mail |
thanks. these updates are great. Jeff
Robert Johnston 10/27/2000 04:40 PM To: Gary Hickerson/HOU/ECT@ECT, Jeffrey A Shankman/HOU/ECT@ECT cc: Darren Delage/AP/Enron@Enron, William Stuart/HOU/ECT@ECT, Trena=20 McFarland/NA/Enron@Enron, Pushkar Shahi/HOU/ECT@ECT, Steve=20 Jacobellis/NA/Enron@Enron, Shane Dallmann/LON/ECT@ECT, Aaron=20 Armstrong/LON/ECT@ECT, Martina Angelova/LON/ECT@ECT, Jurgen Hess/LON/ECT@EC= T=20 Subject: Japan Latest overview from our regular Tokyo source... RJ 1. Mori=01,s (eventual) resignation shouldn=01,t have much impact on the Ja= panese=20 economy or yen-dollar beyond a brief knee-jerk reaction. Regardless of the new=20 government,=20 it seems clear Miyazawa and his surrogates will continue to control economi= c=20 policy=20 and the figurehead nominally in charge of things doesn=01,t really matter.= =20 2. The bottom line is the Japanese are itching for another joint interventi= on. The weak euro is hurting Japanese export sales in the euro zone and beyond and they would like to draw a line in the sand near 85 euros to the dollar and 92 yen to the euro. Problem is, the United States =01) in the person of Larry Summers =01) wants intervention used only as a tool of last resort, a= nd only when central banks can use the element of surprise to spook market players into euro buying and maximize the bang for their buck. 3. Will the Bank of Japan participate in another round of massive euro buyi= ng? Yes, but only when the U.S. participates in full measure. At what level wil= l that multilateral intervention next occur? Very difficult to say. If the Japanese and some in Europe had their druthers they would have been in ther= e this week. Most analysts say the market has drawn a line in the sand at 80 euros to the dollar and if the central banks let the euro sink below that level they=01,ll have a devil of a time getting it back up. Our judgement is that they have to act above 80. To try to narrow our prediction beyond that would, I think, be foolhardy. 4. As to yen-dollar, we see some further yen weakness ahead for several=20 reasons. The wave of bankruptcies in Japan shows no sign of abating. And they=01,re getting bigger, with Kyoei Life=01,s demise the largest yet (4.5 trillion y= en). While big bankruptcies are inevitable and some see a silver lining because Japan is finally trimming the dead wood from its economy, the effect on market sentiment has been grim. The Nikkei remains lost in a dark, dark woo= d for that reason, and in sympathy with the NASDAQ. Oil prices and the events in the middle east are also dollar positive on balance, because of the flight to quality and the fact that much of the world=01,s oil is denominated in dollars. And the Japanese first half repor= ting season ended Sept. 30, taking away a big incentive for exporters to repatriate dollars. So we see a somewhat weaker range for the yen over the near term =01) let= =01,s call it 108-112, with a bias towards the bottom of that range. There=01,s s= ome heavy resistance to the dollar around 111.73, this year=01,s peak. So whil= e the dollar might poke through 110 some time soon, the bulk of trading should be in the 108-109 range. Longer term, rising profits on the export and high-tech sectors and continu= ed strong capital investment will pull the economy slowly out of the woods. An= d we continue to look for a stronger yen next year. 5. On BOJ policy, don=01,t look for another rate increase any time soon. Th= e BOJ took a lot of flack for the timing of its August increase and they made the= ir political point about independence. Our outlook is for an even keel on monetary policy near term. No change at least through the end of this year. 6. Technology notes: Japanese semiconductor makers are set to announce stro= ng earnings growth in the year ended Sept. 30. NEC, Toshiba, Fujitsu, Hitachi and Mitsubishi Electric chip divisions will all report operating profits up between 20 percent and 60 percent. =01( And you may have seen where four Japanese companies =01) Matsushita Electri= c, Toshiba, Sony and Hitachi are entering into another venture to create interactive broadcasting and storage datacasting =01) eventually producing advanced TV set- top boxes (STBs). These are the next generation boxes that turn TVs into computers, enable Internet access via TVs, enable users to access and store music, videos and games and conduct e-commerce transaction= s, remote in hand, from their easychairs.
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