Jason Kelly

I attended a meeting of financiers in Tokyo that invite me occasionally for commentary on the U.S. markets. Before lunch, we heard presentations about the Nikkei's prospects for the rest of this year. After lunch, we listened to projections for the S&P 500. All presenters were Japanese.

While they think the current storm is worse than anybody thought a month ago, they also think it's going to blow over. I'm in that camp as well, wishing I'd foreseen the market slide of the past month but not overly concerned about it lasting all that long.

My favorite observation on the Nikkei slide came from Shinnichi Ishinori of Imaichi Securities: "It won't go below 12,000 and if it does, it won't go below 10,000 and if it does that, it definitely won't go below 8,000."

Now there's a man who knows how to place his bets! Getting below 8,000 would take the Nikkei to the lowest range it's seen...ever. It hit 7,604 in April 2003. Mr. Ishinori's forecast is akin to me saying that the Dow "definitely won't go below 5,000." Of course not.

More interesting than any presentations, however, were the whispered conversations of our 90-minute lunch. There, I learned that all three of Japan's biggest banks are ready to pour money into America's troubled financial sector. That's just the latest evidence of smart money from around the world pouncing on the U.S.A. winter sale.

Mitsubishi UFJ, Mitsui Sumitomo Financial Group, and Mizuho Financial have pooled $10 billion that they want to put to work outside Japan's stagnancy. Just five years ago, the Japanese government had to bail out these same banks for problems that started in the early 1990s. Now, that bail-out money is fully repaid and investors here are riotous in their demands for the banks to find some decent places to put new cash to work. Enough with going nowhere, they've decided. Let's get where the action is.

The big three are serious enough in their intent to own part of America's dynamic financial system that they're prepared to go head-to-head with sovereign wealth funds in other parts of Asia that are aching to snatch a share of Wall Street.

For about the past six weeks, we've seen foreign money gushing into America to buy portions of semiconductor stocks and distressed banks. That the latest posse includes banks from Japan, a ground zero of financial disaster history, shows that those with experience in these matters sense more opportunity than danger.

The collective stance looks to be, "This too shall pass, and when it does I want to own as much of the recovery as possible."

Posted by Jason Kelly at 5:00 PM Japan time
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