We noted this am that Japanese repatriation was a major risk but that we could not provide guidance or a risk-of-result. Well, today it became the piano, falling from the 10th floor.
The Japanese are pulling their money back home just as they do after every crisis, and, judging by Yen strength today, doing so with great determination. The Yen printed 77.48 / $, passing the old post WWII high of 79.75 (Apr/95). That is, investments which swapped Yen for some other currency, are being unwound. They want their money back; they’re a tad nervous. Now the other currency is being sold, and all of them buying Yen like crazy.
So when Japanese folk liquidate global assets, including not just those of lesser credits such as Brazil, but debt and commodity investments in the EU and UK for example, and yes, equity investments in the US (closed down 242 did we not?), what happens? We get hurt.
Thus, it is not the physical destruction that we fear. That if anything adds to US GDP by the way of US firms involved in reconstruction. It is not a long absence of Japanese demand that we fear, for we have already highlighted the reality of quick resuscitation. No, it is abrupt, short-term retrieval of offshore investments, an emergency fund for the Japanese when needed. Over the near term, US interests will suffer the consequences.
Robert Craven
The Japanese are pulling their money back home just as they do after every crisis, and, judging by Yen strength today, doing so with great determination. The Yen printed 77.48 / $, passing the old post WWII high of 79.75 (Apr/95). That is, investments which swapped Yen for some other currency, are being unwound. They want their money back; they’re a tad nervous. Now the other currency is being sold, and all of them buying Yen like crazy.
So when Japanese folk liquidate global assets, including not just those of lesser credits such as Brazil, but debt and commodity investments in the EU and UK for example, and yes, equity investments in the US (closed down 242 did we not?), what happens? We get hurt.
Thus, it is not the physical destruction that we fear. That if anything adds to US GDP by the way of US firms involved in reconstruction. It is not a long absence of Japanese demand that we fear, for we have already highlighted the reality of quick resuscitation. No, it is abrupt, short-term retrieval of offshore investments, an emergency fund for the Japanese when needed. Over the near term, US interests will suffer the consequences.
Robert Craven
No comments:
Post a Comment