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Before The Bell: Unhappy With Japan, Oil Service Upgrade

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Investors are pulling their funds out of Japan. Transocean was upgraded. Futures are flat on this Cyber Monday

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Morning Perspective: Out of Japan

Bloomberg reports hedge funds are shifting their investments out of Japan due to poor returns and poor corporate governance. Japan's average return on equity this year is about 10.2% compared with 20% in the U.S. and 15.7% in Asia. Further, corporate governance standards in Japan are low relative to the rest of Asia as companies fend off purchases by foreign firms using poison-pill and cross-shareholding practices. For more context, read Jeff Saut's Flat and Nervous.

From the Bull Pen: Those looking for an unwind of the Japanese Yen carry trade may look to the UUP, which is the Powershares US Dollar Index Bullish Fund, with a stop below $23.

From the Bear Cave: Japan bears may look for downside plays in Toyota (TM) and Honda (HMC). Buy-stops may be set above the 50 dma ($111.99) for Toyota. A possible option for Honda may include entry after a rally to the 200 dma ($34.83). Buy-stops may be set above.


RIG Upgrade

Credit Suisse upgraded the price target and raised EPS estimates for Transocean (RIG). The firm's action was done to account for figures from its recent merger with GlobalSanteFe (GSF). Citing modest synergies and reduced share count, the firm raised its 12-month price target on the company from $135 to $168, assuming 10 times cash flow per share. Toddo mentioned Transocean last Friday in Random Thoughts.

From the Bull Pen: Those who remain bullish on Transocean may set sell-stops below the 50-DMA ($116.36). A tertiary play could include Baker Hughes (BHI) with sell-stops below the uptrend from the March low ($78).

From the Bear Cave: Tidewater (TDW) has been a laggard in the oil service sector. Those who remain bearish may press the down-side with near-term buy-stops above $53.

Click on Minyanville's Stocks To Watch for more company-specific ideas.


Quick Check Around the World

The Minx has already shaken off its case of the Mondays as foreign markets greet us in the green.

Asian trading closed with the Hang Seng +4.09%, Nikkei +1.66%, Sensex +2.09%, Taiwan +2.23% and Shanghai -1.46%.

A quick check towards Europe finds the CAC -0.69%, DAX -0.03%, FTSE -0.23%.


A Look At Commodities

Crude oil is lower by +0.25 to 98.43. Gold is up +8.2 to 833.0. Silver is up +0.15 to 14.88. Copper is up +3.20 to 306.15.

As of 8:45 AM EST, S&P futures are lower by -0.40 points and Nasdaq futures are up by +1.50 points.


On the Radar

There are no economic events scheduled for today.

It's Cyber Monday today... Good luck!

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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