Friday, October 15, 2010

"No typo: Analyst sets Nikkei 63 million target" (it's Société Générale's Dylan Grice)

UPDATE below.
That would imply some upside wouldn't it. From MarketWatch:
Japan may be headed on the inflationary path that Israel once took, leading one controversial analyst to slap a 15-year price target of 63 million on Japan’s main stock-market index.
The Nikkei 225 (JP:NI225 9,500, -83.26, -0.87%)  stood at 9,500 Friday.
Dylan Grice, a London-based analyst with Societe Generale, isn’t the first to fret about Japan’s debt levels. But he also says the country’s population will accept inflation before cuts in health spending.
“It is often pointed out that in Japan’s aging population, there is no constituency for inflation, which is why there is insufficient pressure on the Bank of Japan to monetize,” he said in a note to clients arguing for the huge jump in the Nikkei.

“However, the same demographic dynamic ensures there is no political constituency for reductions in health expenditures. Yet Japan’s tax revenues currently don’t even cover debt service and social security, persistent and growing fiscal burdens,” he wrote. “Therefore, once the [Bank of Japan] is forced into monetization of government deficits, even if only with the initial intention of stabilizing government finances in the short term, it will prove difficult to stop.”

While democracies typically don’t breed hyperinflation, there is one example, he noted: Israel. That country saw inflation in the 1970s explode into hyperinflation by the mid-1980s....MORE
More on "Nikkei 63,000,000"