Yen-sanity

4 thoughts on “Yen-sanity”

1. Once the reality sinks in over the coming days, the yen will start to strengthen. In the meantime, for anyone that’s always meant to go to Japan (which seems to include pretty much everyone that’s never been) It’s ridiculously cheap there right now. It’s a wonderful country that I miss dearly.

2. Remember when China was accused of exporting deflation to the rest of the world via merchandise trade channels?

   Now it seems that the US is exporting inflation to the rest of the world through monetary channels.

   The choice being forced on many central banks in smaller economies in Asia is:

   whether to let their currencies depreciate and accept the inflationary consequences or
   raise interest rates and weaken their economies to counter the imported inflation that comes from a weaker currency. Japan is not alone.

   Maybe Dr. Mahathir was right about destructive global capital flows.

3. What are the Japan plays on weaker yen, higher inflation, and higher rates?

   Big exporters bring cyclical exposure. Packaged food companies have already ripped. I’m unclear if banks are vulnerable a la SVB.

   I currently own a Japanese semicap name, a Japanese insurance name, and an exporter. That last has sucked (market technician’s term for losing money).

   1. 30 years ago the reflex answer would have been “buy the exporters.” But as the years passed, many or most of them offshored production to China and their southeast Asian neighbors, such as Thailand, Vietnam and Indonesia. So a weaker yen will not benefit most exporters, though it will flatter their numbers reported in yen.

      There are exceptions, such as Fanuc and some specialty cutting edge tech products which kept production at home.

      As far as the general population and economy goes, the impact on imported energy costs outweighs any positive impact on export volumes.

      So you need to do some digging.