Monday, June 13, 2011

And Kyle Bass is out again with the thesis on Japan

And here he comes again.
Kyle Bass was out last week in a Bloomberg Link conference about Rebuilding Japan in New York speaking about his thesis of a Japanese bust.

“We’ll look back at this, I don’t know when, maybe five to seven years from now, and we’ll say it was the most obvious scenario we’ve ever seen in our lives.”

“Once you see sovereign dominos begin to fall, Japan will be in the spotlight immediately”

Here's the presentation I made... I made some updates regarding the Risk-reward for the JPY swaptions and the 5y CDS and also updated most of the balance of payments + activity charts with post-quake data.

Information on the budget situation has to be updated, but it will only look worse since there has been a cut to current government revenues and a much higher number for expenditures as reconstruction efforts kick in.

A lot of the information was obtained from the Ministry of Finance, Bank of Japan and global investment banks sell-side research. Any doubts just send a message over.

The Tail Chaser - The Land of the Setting Sun [June2011]

*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com

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