Guy Haselmann: Fire, Ice, and Budvar

Fire, Ice, and Budvar

by Guy Haselmann, Director, Capital Markets Strategy, Scotiabank GBM

• To ease back into writing my commentary, I thought I would comment on my trip to Tokyo last week.

• In recent years, it is rare to read any article in the financial press about Japan that doesn’t mention its large debt levels, its two lost decades of weak economic growth, or the aggressive QQE policies of the Bank of Japan (BoJ). Yet, during my travels there were no visible signs of any economic problems. As a matter of fact, Tokyo appeared to be a well-functioning, well-organized, and an exceptionally clean and modern city.

• One advantage of having an aging and declining population (and the challenges such bring) is that anyone who wishes to have a job is likely to find one.

• I had an interesting meeting with the Bank of Japan. We agreed that the QE programs of the Fed, ECB, and BoJ are all quite different. This is something I have written about in the past. As a matter of fact, Governor Shirai outlined several of those arguments in a recent speech which can be found here: http://www.boj.or.jp/en/announcements/press/koen_2015/data/ko150909a1.pdf .

• I have heard Governor Shirai speak in the past and believe that she really “gets it”. She is a highly capable and intelligent individual that has comprehensive command of economic and political issues both domestically and internationally. She also seems to fully grasp the more subtle issues effecting markets, investors, and consumers; including those which may arise from regulation, investor psychology, or cultural pressures. Her presence on the Board will continue to serve Japan well.

• During all my meetings, I outlined a very bullish argument for long-dated Treasuries. The message was well received because the Japanese are mostly bullish Treasuries too, but often hear a bearish story from the vast majority of economists and strategist who visit them.

• Scotia’s Tokyo office has a group of marvelous people. I encourage all my Scotia colleagues and customers to get to know them. They work well together and help each other out without hesitation. They epitomize Scotia’s internal motto, “One Team, One Goal”.

• On a side note - they were kind enough to allow me to give them all nicknames. The leader I refer to as “The Colonel”, and I do so with the greatest respect. He is a soft-spoken hard-working man who clearly has earned the respect of everyone. His Lieutenant already has the nickname “Kenzo”, but I now also call him “Tiger”. There is no nicer, gracious, or kinder individual. The firm’s secret weapons are the three diligent, intelligent and engaging saleswomen. When you meet them, please make sure you ask them about their nicknames.

• Every person I encountered during my meetings and travels was polite and hard working. There was a constant, pervasive, and nature level of courtesy and kindness everywhere. Regardless of the job, the people of Japan are hard-working and approach their work with energy. I would not under-estimate what their country is capable of achieving.

• Scotiabank received its Japanese security license about one year ago. I have no doubt that it was a wise decision for Scotia to make Japan one of its priorities.

• It didn’t take long upon deplaning to get back to a different reality. The sign read “Welcome to America”, but going through immigration is far from welcoming or far from warm and fuzzy politeness.

• “One kind word can warm three winter months” - Japanese Proverb

Regards,

Guy

Guy Haselmann | Capital Markets Strategy

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guy.haselmann@scotiabank.com

Global Macro Commentary Oct 13 - Fire Ice and Budvar

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