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Japan to keep printing money for years to come, so learn to enjoy it

Japan to keep printing money for years to come, so learn to enjoy it

Japan to keep printing money for years to come, so learn to enjoy it 

Here is the opening from an informative article by Ambrose Evans-Pritchard of The Telegraph:

There are no one-way bets in global finance, but Japan's stock market comes close. The authorities are about to funnel large sums into Japanese stocks openly and deliberately under the next phase of Abenomics, both by regulatory fiat and by purchasing the Nikkei index directly with printed money.

Prime minister Shinzo Abe is unshackling the world's biggest stash of savings, the $1.3 trillion Government Pension Investment Fund (GPIF). Officials say the ceiling on equity holdings will rise from 12pc to around 20pc as soon as August, opening the way for a $100bn buying blitz.

Fund managers are suddenly in a race to get there first. Japan Post Bank - where Mrs Watanabe dutifully places the family money, confiscated from her Salaryman each month before he can spend it - is itching to rotate more of its $2 trillion holdings into equities before inflation pummels the bond market. So is Japan Post Insurance, no minnow either at $850bn.

Mr Abe's move comes sooner than expected and amounts to a market shock, though nobody should be shocked anymore as he keeps doubling down on the world's most radical economic experiment.

David Fuller's view 

History’s lesson for stock market investors – Don’t fight the central bank.

This item continues in the Subscriber’s Area, where Ambrose Evans-Pritchard’s article is also posted.


The Machine - HP May Have Invented a New Kind of Computer 

Here is the opening for this interesting article from Bloomberg:

HP’s bet is the memristor, a nanoscale chip that Labs researchers must build and handle in full anticontamination clean-room suits. At the simplest level, the memristor consists of a grid of wires with a stack of thin layers of materials such as tantalum oxide at each intersection. When a current is applied to the wires, the materials’ resistance is altered, and this state can hold after the current is removed. At that point, the device is essentially remembering 1s or 0s depending on which state it is in, multiplying its storage capacity. HP can build these chips with traditional semiconductor equipment and expects to be able to pack unprecedented amounts of memory—enough to store huge databases of pictures, files, and data—into a computer.

In theory, that would remove the need for a conventional slow disk/fast memory system. With the Machine’s main chips sitting on motherboards right next to the memristors, they can access any needed information almost instantly. “It’s the Platonic form of computing and is the natural way to do things,” says Papadopoulos, a former computer architect for HP and Sun. “You want lots of, lots of memory, and you want it to always be there and to use it as storage.”

New memory and networking technology requires a new operating system. Most applications written in the past 50 years have been taught to wait for data, assuming that the memory systems feeding the main computers chips are slow. Fink has assigned one team to develop the open-source Machine OS, which will assume the availability of a high-speed, constant memory store. Another team is working on a stripped-down version of Linux with similar aims; another team is working on an Android version, looking to a point at which the technology could trickle down to PCs and smartphones.

David Fuller's view 

I obviously have no idea whether or not Hewlett-Packard will be able to deliver ‘The Machine’ as a competitive, commercial, evolutionary new computer within the next 3 to 6 years.  However, I maintain that there is no known reason for why the pace of new technological innovation should not continue to accelerate well into the exciting future. 

This item continues in the Subscriber’s Area where the article is also posted.


Interesting charts of the day 

Prices are much more volatile than the underlying fundamentals, not least due to leveraged momentum trading.  This section contains daily charts over the last year to show some short-term oversold and overbought conditions.

David Fuller's view 

US grains are showing long position liquidation and short selling following initially favourable crop development.  This is creating short-term oversold conditions.  Wheat has seen the biggest correction, partly due to less concern over Europe’s important Ukraine crop.  Last Friday’s upward key day reversal saw no follow through confirmation but may have marked a penultimate low.  The next upward dynamic between current levels and the January-February low would suggest at least a short to medium-term floor. 

This item continues in the Subscriber’s Area.


Email of the day 

On “upside dynamics indicate accumulation”:

“Hi David in your comment today about China you mentioned 'upside dynamics indicate accumulation'. If possible please could you go into more detail on this. Eg: Is it that lows are holding on blue candlesticks or a combination?  Any suggestions on what to look for would be really appreciated. Many thanks,”

David Fuller's view 

Thanks for a relevant question on a topic covered at The Chart Seminar. I was talking about clues and probabilities rather than certainties, because there are few of the latter in markets and circumstances can change. 

However, a sideways trading range of at least a few weeks is caused by a temporary standoff between supply and demand.  In other words, buying and selling pressure is approximately equal; otherwise the market would not be trading in a clearly defined sideways direction.

The longer this pattern persists, the more it tends to thin out supply above and below the pattern, as people who were hoping to sell a little higher will have to lower their offers if they wish to get out quickly.  Conversely, some of the people hoping to buy below the range will raise bids if the market has steadied at a slightly higher level.  In other words, if the market is not going to them, they will have to change their bids and offers and go to where prices are trading, if they wish to be sure of participating. 

This item continues in the Subscriber’s Area. 


The 2,000 Pound watermelon sold in Japan 

Here is the opening of this report from The Telegraph. A single watermelon has sold for more than £2,000 in a start-of-the-season auction in northern Japan.

The winning watermelon, grown in the town of Toma in Japan's northernmost Hokkaido island, was bought at a market auction for £2,045 (Y350,000).

The fruit was the highest selling among a batch of around 240 Densuke watermelons, a variety famous for their circular form, distinct black rind and crisp, sweet flesh.

This year's price tag marked a £292 (Y50,000) increase compared to the most expensive watermelon sold at the same market last year.

However, despite the eye-watering cost, it is not the most expensive on record, with that accolade held by a watermelon sold at auction for £3,799 (Y650,000) in 2008.

David Fuller's view 

Japan’s passion for perfectly formed fruit is probably unique but these melon prices are also a sign of increasing confidence.  Fruit prices were also strong in 2008 before Junichiro Koizumi’s tentative economic recovery was torpedoed by the West’s credit crisis.  


Pan Asia Dividend Aristocrats Review 

Eoin Treacy's view 

In order to gain access to the S&P Pan Asia Dividend Aristocrats a company must increase its dividend for at least 7 consecutive years. S&P made constituents of the Index freely available until 2011 but then decided to make them proprietary. As a result in reviews of the sector over the last few years I have been limited to using out of date information. Happily, S&P have changed their policy and the constituent data is available once more.

The Index still has 57 members but there have been 31 changes. The number of Australian and Indian companies has decreased while the Japanese and Chinese weightings have increased. The Philippines and Indonesia are no longer represented while South Korea only has only one member.

The performance of the Index is quite different from either the US or European equivalents; highlighting the more difficult trading environment evident in Asia over much of the last 18 months; with the exception of Japan last year. 


Musings from the Oil Patch June 10th 2014 

Thanks to a subscriber for this edition of Allen Brooks ever interesting report for PPHB which may be of interest to subscribers. Here is a section: 

The translated Nikkei article described the transmutation experiment in the following manner: “The researchers put the source material that they want to convert on top of the multi-layer film, which consists of alternately laminated thin films of calcium oxide and palladium. The thin metal layers have a thickness of several tens of nanometers. Elements are changed in atomic number in increments of 2, 4 and 6 over a hundred hours while deuterium gas is allowed to pass through the film.

“The transmutations of cesium into praseodymium, strontium into molybdenum, calcium into titanium, tungsten into platinum have been confirmed.”

Mitsubishi’s patent was originally issued in Japan but it was extended in 2013 into a European patent, and protects the company’s proprietary thin-film transmutation technology. The Japanese newspaper also reported that a research and development company of the Toyota Group (TM-NYSE), Toyota Central Research and Development Labs, has also replicated the elemental conversion research with results similar to Mitsubishi’s experiment.

While the Mitsubishi and Toyota research efforts have focused on material transformation rather than the generation of energy, the process is similar. High profile work on LENR as an energy source has been conducted by Andrea Rossi, an Italian engineer, inventor and entrepreneur. He has invented the Energy Catalyzer (E-Cat) and completed two tests, one of which produced 900o C (1,650o F) of heat that could be used to generate steam to power a generator to produce electricity. In early 2013, a group of independent scientists ran tests on two versions of the “Hot Cat,” a one megawatt LENR unit. Their coefficient of performance (COP) was measured, determining the ratio of energy out versus energy in. The COPs in the two tests were 5.6 and 2.2, respectively. Another group that is not affiliated with nor has it worked with Mr. Rossi, has been using an E-Cat and conducting longer term tests, the results of which may be released soon. This could be a monumental development, although it will not end skepticism of the technology.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

In the aftermath of the Fukushima disaster Japan has a vested interest in figuring out how to deal with the problems associated with nuclear power. In the near term that has meant building tsunami walls around nuclear plants and reinforcing structures to protect them from earthquakes. The challenges represented by nuclear waste have been intractable for a long time but the transmutation methods detailed above hold out hope that these will eventually be solved. 


The coming digital anarchy 

Thanks to a subscriber for this interesting article by Matthew Sparkes for The Daily Telegraph. Here is a section: 

The clever part is how the network reaches a consensus on what should be written in it. Otherwise there could be thousands of different blockchains, all disagreeing over who owns what.

The idea is that each and every transaction is broadcast by the person initiating it. Rather than telling the bank we want to spend £3, we tell the world. That transaction is bundled up with thousands of others and cryptographically bound into a “block” by “miners”.

Technically, anyone with a computer can be a miner – they just need to install a small piece of software. But it’s not easy to do: far from it.

Bitcoin “miners” are so called because gold miners traditionally have to put in a lot of work before they see any reward in the shape of precious metal. In the world of Bitcoin, miners have to crack an extremely difficult cryptographic problem before they are rewarded with some newly minted Bitcoins. That “block” is then added to the end of the blockchain and shared around the world.

To quote the wiki dictionary maintained by “the Bitcoin community” – perhaps the nearest you can get to an official explanation – “mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady … The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus.”

In other words, the blockchain remains both public and infallible. It’s a totally reliable and trustworthy record of who owns what, but also who owned what back through time, all the way to the creation of Bitcoin.

Eoin Treacy's view 

To describe bitcoin as a currency is to miss the point somewhat with regard to what the development of cryptocurrencies means. The blockchain is a facilitator of transactions whether financial, services oriented or communications. In essence it is a ledger anyone can access where anything can be recorded and archived.


The Chart Seminar and Global Strategy Sessions 

Eoin Treacy's view 

Following an encouraging start to the year’s speaking engagements I am looking forward to our events later this year. . . 

We are also available to conduct private seminars and occasionally agree to speaking engagements at investment conferences and professional societies. 

With regard to The Chart Seminar, 2014 marks a number of changes in how we organise the event.  In order to facilitate more venues we are open to partnering with other groups to market the event. If your organisation would like to arrange a seminar either internally or for your clients please do not hesitate to contact us. .

The remaining dates and venues for 2014 are:

September 22nd & 23rd The Chart Seminar Chicago

November 13th & 14th The Chart Seminar London - Radisson Edwardian Hotel, Leicester Square

If you are interested in any of our remaining venues please contact Sarah Barnes at [email protected]

The full rate for The Chart Seminar is £950 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires two months ahead of the event start date. Subscribers are offered a discounted rate of ¡ê850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

The full rate for the Global Strategy Sessions will be £450 + VAT). The early booking rate of £375 for non-subscribers expires two months ahead of the event start date.

Subscribers are offered a discounted rate of £350. Anyone booking more than one place can also avail of the £350 rate for the second and subsequent delegates.

Delegates who attend both The Chart Seminar and the Global Strategy Session receive a reduced rate of £250 on the Global Strategy Session. 


52nd Annual Contrary Opinion Forum 

Eoin Treacy's view 

It has been my pleasure to accept an invitation to return to the Basin Harbor Club in Vermont to speak at the 52nd Annual Contrary Opinion Forum hosted by Fraser Asset Management between October 1st and 3rd. The Forum’s convivial atmosphere is something Mrs.Treacy and I look forward to not least because it gives us an opportunity to meet so many subscribers.  

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