Word: kanno
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...Many factors are dampening investors' enthusiasm, including recession-smitten corporate profits and the uncertain prospects for economic recovery. "If you believe that corporate profits have no chance to rise in the next two to three years, then you could argue that stock prices are still too expensive," says Masaaki Kanno, chief economist at JPMorgan Securities in Tokyo. "More importantly, you could argue that it's too risky to hold the stocks." Kanno says people have lost a sense of what's fair value for financial assets, including stocks and other risky assets; they prefer time deposits, risk-free investments...
...Analysts in Japan say the U.S. faces a similar situation today. The Fed's recent rate cut "is better than doing nothing, but it will unlikely work so much as it did in the past," says Masaaki Kanno, chief economist at JPMorgan Securities in Tokyo. Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo, believes that the Fed may bring its rates down to zero by the middle of 2009, as the U.S. economy slows in coming quarters. "Will it be effective or stimulative? My answer is not necessarily so," he says...
...Equities become more attractive when interest earned by stashing cash in the bank is lower than the inflation rate. "While the BOJ's zero-rate policy did not work as expected in terms of reviving the economy, it contributed to preventing the financial system from collapsing," says JPMorgan's Kanno. The U.S. may soon find itself in a strange, zenlike economic state in which zero is, in fact, better than nothing...
...recent failures of Yamato Life Insurance Co., one of the country's major insurers, and New City Residence Investment Corp. a real estate investment trust (REIT), government officials are pushing to reactivate the law as a precautionary measure. "Huge storms are coming to Japan from abroad," says Masaaki Kanno, chief economist at JPMorgan Securities Japan. "It's not a bad idea to set up those laws to avoid or minimize the worst situation...
...question now is whether or not the Fed's rate cut is enough to reverse the markets' downward spiral. Many analysts in Asia say it is not. "I don't think that the coordinated rate cut will work," said JPMorgan's Kanno. "The only thing it could do is to buy time. Monetary policy doesn't work anymore, once confidence is lost." Kanno and other observers in Japan - recalling their own painful financial crisis in the 1990s - believe the solution needs to be far more dramatic. They advocate that the U.S. government directly invest taxpayer money into private financial firms...