TheChek News Flow

After Hours Summary: GMCR +40.4%, AKAM +17.3%, YELP +7.0%, TWTR -17.5%, P -10.1%, following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: GMCR +40.4%, AKAM +17.3%, GLUU +14.2%, OSUR +8.1%, YELP +7%, LNC +5.5%, GPRE +5.1%, SGU +3.7%, DIS +3.5%, OGE +3.3%, OGE +3.3%, QUIK +3.3%, SWI +3.3%, BKD +2.7%, PMT +2.7%, FLT +2.6%, SPF +2.4%, AVNR +2.3%, ALL +1.9%, PLNR +1.4%, OESX +1%, RNWK +0.6%, ORLY +0.3%, TWO +0.3%, MNR +0.2%, AFFX +0.1%

Companies trading higher in after hours in reaction to news: - GMCR +40.4% (co and Coca-Cola (KO) entered into long-term global strategic partnership - KO to purchase 10% minority equity stake in GMCR for $1.25 bln; co also reported earnings), - PBMD +25.6% (co announced that multiple jurisdictions have approved its amended CAN-004 protocol including regulators in Latvia, Lithuania, Bulgaria, Ukraine and Belarus), - FLT +2.6% (signed an agreement to provide a full service outsourcing solution for CST Brands in Canada; co also reported earnings), - PDLI +1.9% (announced proposed $250 mln public offering of new convertible senior notes due 2018), - HOG +1.2 (increased quarterly divided 31% to $0.275 from $0.21 per share; announces additional 20 mln share repurchase authorization), - UPS +0.3% (Co and Independent Pilots Association announce statement on move to mediation)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: TWTR -17.5%, EMAN -12%, P -10.1%, SFLY -8%, WNC -7.6%, IRBT -6%, SWM -5.8%, TYL -4.9%, TTMI -4.7%, SRI -4.6%, TSO -3.9%, ATML -3.5%, MRO -3.4%, TQNT -3.4%, CALD -3.1%, ENTR -3.1%, FMC -2%, SWIR -1.7%, PAA -1.5%, PRU -1.2%, ZUMZ -0.9%, MTGE -0.8%, SCSS -0.5%

Companies trading lower in after hours in reaction to news: NLST -9.7% (announced proposed public offering of common stock, size not disclosed), SODA -6.0% (trading lower following positive news for competitor GMCR), PPHM -4.2% (announced public offering of Series E preferred stock), CALD -3.1% (acquired LeadRocket; co expects no significant contribution to revs from the new technology until the later part of 2014 and does not anticipate the acquisition to be dilutive to earnings in Q1; co also reported earnings), PTIE -2.1% (filed for $150 mln mixed securities shelf offering), CSTM -1.7% (announced secondary offering of 25 mln shares by selling shareholder), EPD -1.4% (priced $2 bln of Senior Unsecured Notes; $850 mln due on February 15, 2024 and $1.15 bln due on February 15, 2045)

Asian Market Update: Australia returns to trade surplus while retail sales continue pace of modest growth, sending AUD higher

***Economic Data*** - (AU) AUSTRALIA DEC TRADE BALANCE: +A$468M (2nd month of surplus following revision of prior after 4 months of deficit) V -A$200ME - (AU) AUSTRALIA DEC RETAIL SALES M/M: 0.5% V 0.5%E - (AU) AUSTRALIA Q4 NAB BUSINESS CONFIDENCE: 8 V 3 PRIOR - (HK) HONG KONG JAN HSBC/MARKIT PMI: 52.7 V 51.2 PRIOR (23-month high) - (JP) JAPAN JAN TOKYO AVERAGE OFFICE VACANCIES: 7.2 V 7.3 PRIOR - (JP) Japan investors sold net ¥1.82T in foreign bonds last week (3rd consecutive week of net sales) vs sold net ¥357.0B in prior week; Foreign Investors sold net ¥751.9B in Japan stocks v sold net ¥154.6B in prior week - (TH) THAILAND JAN CONSUMER CONFIDENCE: 71.5 V 73.4 PRIOR - (VN) VIETNAM JAN HSBC/MARKIT MANUFACTURING PMI: 52.1 V 51.8 PRIOR - (TW) TAIWAN JAN CPI Y/Y: 0.8% V 0.6%E; WPI Y/Y: 0.4% V 0.3%E

***Observations/Insights*** - Green Mountain surges over 40% in extended session after announcing a 10% equity investment from Cola-Cola; SodaStream fizzles out on diminished likelihood of a buyout (as rumored in June 2013). - Twitter disappoints in its first earnings report as a public company, falling nearly 20% and dragging Facebook down by about 2% afterhours. Analysts are particularly concerned about a slow growth in the Monthly Active Users (MAUs) metric (only in line with the growth at Facebook), prompting CEO to pledge to scale revenues with new ad products. - Pandora tops estimates but shares slide afterhours on soft initial FY14 guidance. - Australia retail sales growth was in line with consensus, while terms of trade turned the corner to the upside. After last month's upward revision (previously seen as a deficit), this marks a 2nd consecutive month of surplus. Exports were particularly strong, rising 4% m/m, with China-bound shipments growing an impressive 8.2%. Exports of iron ore jumped 16.9% m/m to A$7.3B. - Shanghai Composite will resume trading tomorrow after the Lunar New Year week-long break. Local press reports suggest retail market was strong despite the scrutiny placed on luxury gifts amid govt crackdown on corruption. - Pair of BOJ board members hint the central bank will "act as needed" to achieve 2% inflation target within the specified time frame. While the commentary is shy of an explicit commitment to further easing, it does suggest the BOJ took note of yesterday's tepid wage growth.

***Fixed Income/Commodities/Currencies*** - JGB: (JP) Japan MoF sells ¥457.4B in 1.7% (1.7% prior) 30-yr notes; Avg yield: 1.587% v 1.665% prior; Bid to cover: 3.43x v 3.34x prior - SLV: iShares Silver Trust ETF daily holdings fall to 10,090.7 tonnes from 10,095.1 tonnes

- AUD was back in focus, retaking the $0.89 handle after stronger than expected trade data. AUD/USD hit $0.8980 after the reports - up 70pips from opening lows - while AUD/JPY and AUD/NZD also rose about 60pips each for ¥91.25 and NZ$1.09 respective highs. JPY was under slight pressure following BOJ Dep Gov Nakaso commentary, rising over 30pips from the lows above the ¥101.60 level. EUR/USD traded down about 20pips below $1.3520 in the afternoon session ahead of the ECB rate decision that some expect to turn more dovish after the recent soft inflation prints.

***Speakers/Political/In the Papers*** - (CN) China National Audit Office: To impose stricter audits to intensify crackdown on corruption - China Daily - (CN) China National Development and Reform Commission (NDRC): To improve agricultural product price system - Chinese press - (CN) China Ministry of Commerce (MOFCOM): Consumer market was strong during Lunar new year despite the decline in luxury sales - Shanghai Daily - (JP) Japan BOJ Dep Gov Nakaso: BOJ will act to achieve 2% target if necessary; Expects growth in developed economies to accelerate, as well as effect to spread to emerging markets - (JP) BOJ Dep Gov Iwata: Will not stop easing abruptly without inflation target achieved; Japan making steady progress towards BOJ's 2% inflation target - (AU) Australia Treasurer Hockey: Australia must maintain fiscal flexibility; Govt has to repair budget as budget is structurally unsustainable - (NZ) Auckland avg home price in Jan fell 7.6% m/m to NZ$647.2K; Still up 7.7% y/y - NZ press - (KR) South Korea state-run think tank Korea Development Institute (KDI): Economy showing signs of "moderate recovery" - Korean press - (KR) South Korea Financial Supervisory Service (FSS): Foreign investors were net sellers of Korean stocks in Jan for the 3rd consecutive month - Korean press - (RU) US Govt issues advisory to airlines flying into Russia for the Olympic games, suggesting potential terrorist threat

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +0.4%, S&P/ASX +1.1%, Kospi +0.8%, Shanghai Composite closed, Hang Seng +0.5%, Mar S&P500 +0.3% at 1,748, Apr gold -0.1% at $1,255, Mar crude oil +0.2% at $97.54/brl

US markets: - GMCR: Coca-Cola and GMCR enter into Long-Term Global Strategic Partnership; KO takes a 10% stake for $1.25B; Reports Q1 $0.96 v $0.91e, R$1.39B v $1.41Be; +45.1% afterhours - AKAM: Reports Q4 $0.55 v $0.51e, R$436M v $422Me; Guides Q1 $0.51-0.55 v $0.49e, R$426-442M v $414Me - conf call; +17.8% afterhours - YELP: Reports Q4 -$0.03 v -$0.02e, R$70.7M v $67.1Me; +7.4% afterhours - DIS: Reports Q1 $1.04 adj v $0.91e, R$12.31B v $12.3Be; +3.4% afterhours - ALL: Reports Q4 $1.70 v $1.38e, R$8.79B v $7.45Be; +2.3% afterhours - HOG: Raises quarterly dividend by 31% to $0.275/shr; announces 20M (9.0% of shares outstanding) share repurchase authorization; +1.3% afterhours - ORLY: Reports Q4 $1.40 v $1.32e, R$1.62B v $1.60Be; +1.3% afterhours - CSCO: Enter Into Patent Cross-License Agreement with Samsung; Marks Important Industry Step to Enhance Cooperation by Curbing Unnecessary Patent Litigation; +0.4% afterhours

- PRU: Reports Q4 $2.20 v $2.23e, R$10.98B v $11.5Be; -1.2% afterhours - FMC: Reports Q4 $1.05 v $0.95e, R$1.1B v $1.04Be; -2.0% afterhours - MRO: Reports Q4 $0.60 adj v $0.74e, R$3.29B v $3.53Be; -3.4% afterhours - TSO: Reports Q4 $0.04 v $0.30e, R$10.1B v $9.92Be; -3.9% afterhours - SRI: Guides FY13 lower to $0.55-0.60 v $0.76e, R$945-950M v $956Me ($0.75-0.95, R$939-974M prior); Guides initial FY14; -4.6% afterhours - IRBT: Reports Q4 $0.11 v $0.11e, R$126.3M v $126Me; -6.6% afterhours - WNC: Reports Q4 $0.15 v $0.23e, R$458.4M v $457Me; -7.6% afterhours - P: Reports Q4 $0.10 v $0.07e, R$204M v $197Me; Exec: expect to return to profitability after net loss expected in Q1 - press interview; -9.9% afterhours - TWTR: Reports Q4 $0.02 v -$0.02e, R$243M v $212Me; Confident we can continue to scale revenue by adding new ad products - conf call; -17.9% afterhours

Notable movers by sector: - Consumer Discretionary: Fuji Media Holdings 4676.JP +5.5% (9M results); Wynn Macau 1128.HK +3.1%, Sands China 1928.HK +7.0%, Galaxy Entertainment Group 27.HK +4.0% (positive comment from JP Morgan) - Consumer staples: Woolworths Limited WOW.AU +2.0% (H1 results) - Materials: Alumina Ltd AWC.AU +2.7% (intends to delist from NYSE); Ube Industries 4208.JP -6.6% (9M results) - Industrials: Mazda Motor 7261.JP +5.2% (9M results); Asciano Ltd AIO.AU -1.5% (provides update on damaged equipment); Virgin Australia VAH.AU +7.0% (response to ASX price query) - Healthcare: Takeda Pharmaceutical 4502.JP -2.0% (9M results)

Top Trading Ideas/RV: Short Under Armour (Long Lululemon, Nike)

Under Armour has become one of the most expensive apparel companies in the world selling at tweeter-like valuation levels. Although the company is growing furiously, it is selling on 3x sales, 45x earnings, 22x ebitda and 8 times book value (all on 2015 estimates). The company announced better than expected numbers late January and the stock was up almost 25% on the news, reaching a market value of $11bn.

Under Arnour manufactures performance apparel. As a hedge to the short UA position, we recommend going long Lululemon. LULU is a designer and retailer of athletic products, in particular targeted at the yoga market. The stock is an ex market darling. It was IPOed in July 2007 $9/sh. The stock quickly rose to almost 30 to fall to less than $3 post 2008 crisis. It then rose from under $3 in 2009 to more than $80 in mid-2013. Since then, the company announced disappointing earnings and the stock is down to $44.60. However, Lululemon has some of the highest margins in the sector, almost comparable to the luxury sector. It should resume strong growth next year and beyond.

FULL REPORT ATTACHED

Walt Disney beats by $0.13, reports revs in-line

Reports Q1 (Dec) earnings of $1.04 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus Estimate of $0.91; revenues rose 8.5% year/year to $12.31 bln vs the $12.23 bln consensus.

* We had an incredibly strong first quarter, delivering a 32% increase in adjusted earnings per share and double-digit increases in operating income in all business segments," said Robert A. Iger, Chairman and CEO, The Walt Disney Company. Media Networks revenues for the quarter increased 4% to $5.3 bln and segment operating income increased 20% to $1.5 bln. * Operating income at Cable Networks increased $325 mln to $1.3 bln for the quarter due to growth at ESPN, higher equity income from A&E Television Networks (AETN) and, to a lesser extent, an improvement at the domestic Disney Channels. * Operating income at Broadcasting decreased $84 mln to $178 mln for the quarter due to higher programming costs, lower program sales and decreased advertising revenue, partially offset by higher affiliate revenues and lower general and administrative expenses. * Parks and Resorts revenues for the quarter increased 6% to $3.6 bln and segment operating income increased 16% to $671 mln. Operating income growth for the quarter was primarily due to increased guest spending at our domestic parks and resorts, which reflected higher average ticket prices and food, beverage and merchandise spending. * Studio Entertainment revenues increased 23% to $1.9 bln and segment operating income increased 75% to $409 mln. Higher operating income was due to an increase in worldwide theatrical distribution results and, to a lesser extent, increases in domestic home entertainment and television/subscription video on demand (TV/SVOD) distribution. * Consumer Products revenues increased 11% to $1.1 bln and segment operating income increased 24% to $430 mln. Higher operating income was due to increases at its Merchandise Licensing and Retail businesses. * Interactive revenues for the quarter increased 38% to $403 mln and segment operating income increased $46 mln to $55 mln. Higher operating income was due to an increase at our console games business driven by the success of Disney Infinity in the current quarter compared to Epic Mickey 2 in the prior-year quarter and growth from our Japan mobile business.

Closing Market Summary: Stocks Slump as Cautious Sentiment Persists

Equities ended the Wednesday session on a mixed note. The Nasdaq and S&P 500 finished with respective losses of 0.5% and 0.2% while the Dow Jones Industrial Average ended flat. Despite its outperformance, the Dow was unable to settle above its 200-day moving average (15479) for the second day in a row.

Today's affair began on a lower note as stocks succumbed to the pressure exerted by the Japanese yen, which strengthened again overnight. Yen strength has been a considerable headwind for equities since the start of the year as many professionals who borrow in yen to fund their equity positions have found themselves in a bit of a pickle. In 2013, when the yen weakened steadily while equities rallied, the carry trade yielded strong results. This year, however, with the yen climbing and equities sliding, the losses have been compounding.

The dollar/yen pair marked its session low right below the 100.80 level this morning, but rallied sharply off that low. The pair then notched a high of 101.65 after today's better-than-expected ISM Services report before giving up a portion of its gain. Dollar/yen wasn't able to overtake the morning high and finished the New York Session right below the 101.40 level. Meanwhile, yen futures added 0.2%, extending their 2014 gain to 3.8%.

Overall, the lack of defined sector leadership and the presence of some mixed signals made for a sloppy session.

Out of the four top-weighted sectors, consumer discretionary (+0.2%), financials (-0.1%), and technology (+0.01%) outperformed while health care (-0.6%) lagged.

The discretionary sector drew strength from modest gains among retailers.

The SPDR S&P Retail ETF (XRT 78.12, +0.25) added 0.3%, but remains down 11.3% so far in 2014. Elsewhere, technology displayed relative strength with some help from large-cap components like Apple (AAPL 512.59, +3.80) and Google (GOOG 1143.20, +5.04).

On the downside, health care (and Nasdaq Composite) struggled to keep pace with the S&P 500 as biotechnology lagged. The iShares Nasdaq Biotechnology ETF (IBB 236.95, -4.06) lost 1.7%, but remains higher by 4.4% this year.

Also of note, the industrial sector finished in-line with the S&P 500, but transports struggled. The Dow Jones Transportation Average lost 0.8% after CH Robinson (CHRW 53.16, -5.48) reported disappointing earnings.

The mixed performance pushed some participants in the direction of volatility protection as the CBOE Volatility Index (VIX 19.58, +0.47) rose 2.5%. Interestingly, the bond market did not reflect a safety bid as Treasuries ended on their lows with the 10-yr yield up four basis points at 2.67%.

Trading volume was a bit above average as 740 million shares changed hands at the NYSE.

Today's economic data included three reports:

* The weekly MBA Mortgage Index ticked up 0.4% to follow last week's'0.2% decline. 

* According to today's ADP National Employment Report, employment in the nonfarm private business sector increased 175K in January. This was slightly below the increase of 178K expected by the consensus. The December reading was revised down to 227,000 from 238,000. 

* The ISM Non-manufacturing Index for January increased to 54.0 from 53.0. The consensus expected the index to increase to 53.8. Weather conditions, which were blamed for the poor manufacturing report, seemed to have no impact on services sector. Business Activities accelerated in January. The index increased to 56.3 from 54.3.

Tomorrow, Challenger Job Cuts for January will be announced at 7:30 ET while weekly initial claims, December trade deficit, and fourth quarter productivity data will be released at 8:30 ET.

* Nasdaq Composite -4.0% YTD  * S&P 500 -5.2% YTD  * Russell 2000 -5.8% YTD  * Dow Jones Industrial Average -6.9% YTD

Boeing: Takeaway's from Cowen's Aerospace/Defense & Transportation Conference

Boeing presented at Cowen's Aerospace/Defense & Transportation Conference; takeaways were as follows: - CEO says overall aircraft demand is stronger than ever seen since he's been in the industry - US demand is improving; Europe is "still to come"; strength in Middle East and China "unabated" - Sees no effect from the Emerging Market stress - Co still experiencing more requests to move delivery dates closer rather than push them out - Pricing is being supported by demand for new technology, despite intense competition - See signs of life in the cargo market - "Cargo is the thing that will keep (the 747-8) going" - 787 is doing well, despite co having to add people in SC to address a bottleneck in mid-body production Only four 787's were delivered in Jan - Say it is "fair criticism" that co needs to help suppliers more on engineering and process improvement; says co is trying to do better - Room for margins to improve. partly from driving volume and from better prices from suppliers - Note the budget agreement delays sequestration for two years, but it hasn't gone away - Real international strength BA has is industrial cooperation in all countries around the world; leverage-able; "big advantage" - Planning on "flatish" defense business margins; "It's a tough business"

MOODY'S RAISES MEXICO SOVEREIGN RATING ONE NOTCH TO A3 FROM BAA1; OUTLOOK STABLE - The decision to upgrade Mexico's sovereign ratings was driven by the structural reforms approved last year, which Moody's expects will strengthen the country's potential growth prospects and fiscal fundamentals. As the full impact of the reforms becomes more evident over time, Moody's expects that Mexico's credit metrics will report firm - but gradual - improvements, thereby further reinforcing the country's already robust sovereign credit profile.

Fed's Plosser (hawk, 2014 voter): Should scale back QE faster to reflect strength in the economy : sees GDP at 3% in 2014 and unemployment at 6.2% by the end of the year - sees unemployment rate reaching 6.5% (fed threshold) in the 1H of 2014, would like to be done with QE by the time the unemployment rate reaches 6.5% - Volatility in the emerging markets is not a risk to the US - inflation likely to firm up this year, expects less fiscal drag this year - Decline in labor participation rate rate is driven mostly by demographics

Vinci SA Reports FY13 EPS €3.54 (flat y/y), net income €1.96B, (+2.3% y/y), Rev €40.3B (+4.4% y/y) - 2014 outlook: Contracting: targeting improved operational performance Concessions: motorway traffic pick up trend to continue; good airport traffic dynamic - EBITDA was €5.6 billion (+3.3%) with a margin of 13.9%. - Board of directors will propose to the next Shareholders General Meeting an all-cash full year 2013 dividend of €1.77, i.e. 50% of net earnings per share.

Japan’s new-year drop is not a buy signal

But bargains are available in sectors where momentum is strong Headlines on Tuesday’s Reuters news blog said nearly everything that needs to be said about investing in Japanese equities. The first read: "Nikkei drops to four-month low on strong yen triggered by weak US data." The second read: "Toyota says expects record annual profit, maintains outlook."

This is a problem for those trying to invest in Japan.Currency moves overwhelm everything else, and are seldom driven solely by domestic factors. Earlier this week, the yen was driven up as part of a "risk-off" move as managers attempted to repatriate their money out of emerging markets. A strong yen is taken to be bad for Japanese stocks – even those that do not rely on exports – and so Japanese equities sold off dramatically, leaving the Nikkei 225 down 14.3 per cent from its high set at the turn of the year. Wednesday’s trading saw a calmer foreign exchange market, and a weaker yen, and Japanese stocks regained some 2 per cent – notably Toyota regained 6 per cent. But the problem remains: there is a disjunction between top-down global macro factors, which give cause for alarm at present, and bottom-up micro factors, which in Japan are arguably more encouraging than anywhere else in the developed world. Has the international turbulence created a buying opportunity in Japan? Almost certainly not. However, the possibility that the turbulence will create some bargains is growing. Why not enter now? During times of volatility, it is often best just to cling to chart patterns. Tuesday’s sell-off brought the Nikkei 225 and the Topix index below their 200-day moving averages for the first time since Shinzo Abe was elected as premier in 2012. Once a technical pattern like this is broken, the selling can continue for a while. and of course the ramp up in Japanese share prices has been swift – a gain of 74 per cent in barely a year at one point – creating plenty of room to fall. Technical factors are unhelpful. The end of the Japanese financial year is approaching, giving many investors the temptation to lock in profits ahead of time by selling. In a generalised sell-off, investors from outside the country will want to take profits where they have them, which at present means Japan. Meanwhile, "Abenomics" – the aggressive policies to shake the country out of deflation that were adopted late in 2012 – is yet to affect the behaviour of Japanese institutions. Jesper Koll, head of equity strategy in Tokyo for JPMorgan, points out that Japanese pension funds have been net sellers of equities for 23 consecutive weeks. The emerging markets sell-off could easily continue and the yen could keep appreciating, which would mean further falls for Japanese stocks. Finally, there are domestic "macro" reasons for caution. The notion is creeping into the market bloodstream that Japan’s financial officials are complacent. Abenomics is supposed to raise inflation to 2 per cent. And yet the Bank of Japan’s own forecast for inflation this year is 1.5 per cent. That is being interpreted by some as signalling that there is no need for extra measures to hit the 2 per cent mark. Earnings growth Why, then, is there cause to believe in a buying opportunity? The main reason is thatAbenomics does appear to be delivering the one thing that should matter most to equity investors: earnings growth. Since Mr Abe won his election, 12-month trailing earnings for Topix companies have risen 123 per cent, according to Bloomberg data. That is in yen terms. Plainly earnings strength owes much to the weak yen, but not everything. When Topix earnings are denominated in dollars, they have still gained 78 per cent in the past 15 months. US earnings, for S&P 500 companies, have over the same period gained about 8 per cent, as have western European companies. Japanese profits fell more than US companies during the Lehman crisis, but even over five years, profit growth is in line with the US in dollar terms. Further, Japan is the only country in the world where earnings momentum is positive – or, in other words, where a majority of companies are revising forecasts upwards, rather than downwards. According to the tally of earnings momentum kept by Andrew Lapthorne of Société Générale, positive upgrades accounted for 58 per cent of total estimate changes for next year in Japan over the past month. Traditional exporting powerhouse sectors such as electronic and electrical equipment, cars and industrial engineering all appear very bullish. Strong earnings growth like this means valuations are not stretched, even after such a rally. The Topix machinery sector, for example, trades at exactly the same book multiple now as it did three years ago, pre-Abenomics. Combine decent valuations with recent falls and strong earnings momentum, and a central bank that remains keen to print money, and Japan could well soon produce a buying opportunity. Financials look cheap Where exactly might be cheapest? The sectors to have sold off most dramatically in the last few weeks have all been financial. The Topix "other financials" index is in a bear market, down 20.8 per cent for the year after Tuesday’s sell-off. Banks, real estate and insurance also suffered falls well into double figures. Banks begin to look unduly out of favour. Mizuho, for example, trades for less than its book value. Real estate companies, where they are not unduly leveraged, also present interesting opportunities. Note also that earnings momentum in financials is extremely positive – all estimate changes for non-life insurance in recent weeks have been upgrades, but momentum is also strong in banks, real estate and other financial services. Japanese banks have earned a global label as "zombies" over the last two decades. This sounds like a classic case of a sector that has fallen so far out of favour as to make them a value opportunity. Another interesting idea is to focus on an area where Japan’s ageing demographicsare an advantage. As Alex Treves, who heads Fidelity Worldwide Investment’s Japanese equities business, puts it, Japan has "the world’s largest test-bed of ageing wealthy people". Japan has fostered a powerful medical products industry, with opportunities to export to the rest of the world in due course. There also remains a case for exporters, even if the worst-case scenarios for the developing world come about. Mr Treves points out that many had brought down costs so as to be profitable with yen at Y80 to the dollar – if the yen stays comfortably above Y100, they should still be in a strong position. None of this argues for diving in while the market turmoil continues. And if the worst predictions for China and other emerging markets come true, corporate Japan will suffer as well. But if the foreign exchange market does not deliver the yen back to its levels of 15 months ago, and sap any chance of growth from Japan’s export markets, there are areas where value might easily be found.