Post Tagged with: "Japan"
Chinese shunning trade with French banks
Reuters has reported that Bank of China, a dealer in China’s foreign exchange market, has stopped doing foreign exchange forwards and swaps with several European banks. Separately, sources say the European banks involved are Societe General, Credit Agricole, and BNP Paribas, the three banks being frozen out of the US money markets. Allegedly, the bank has also stopped trading with UBS because of worries about UBS’s rogue trading losses
Is the US Becoming Japan?
As Treasury bond yields tumble to record lows we’re hearing lots of talk the U.S. is following the economic trajectory of Japan. Not so fast! Take a look at the following chart
Big in Japan
As I see it, Japan’s problem was that during the 1980s it was so addicted to investment-led growth and artificially cheap financing that it misallocated capital on a massive scale and failed to include the resulting implicit losses in its GDP calculations. If you look at real per capita household income and household consumption growth during the period of Japan’s stagnation, you will find that both of them rose fairly rapidly. This isn’t what typically happens during a US-style financial crisis, when household income suffers
After Ben, Markets Brace for US Payrolls
The impact of Fed Chairman Bernanke’s testimony – his assessment of the economy and the further accommodation that can be provided to stem economic stresses into next week – will dominate market action into the next week. The G10 currency complex has been highly sensitive to the global risk environment. The potential to break outside recent ranges is down to the policy responses to the crisis together with the continued evolution of the growth figures with elevated volatility levels indicating the markets are preparing for further disruption ahead
Jobs and deficit crisis will lead to double dip and more downgrades
Former Fed nominee and Nobel Laureate Peter Diamond spoke to Bloomberg News about how he sees the economic difficulties the United States faces. His view is that America faces a jobs crisis in the here and now and that deficit reduction is a longer-term problem
The yen is a safe haven as Japan is the world’s largest creditor
The yen is a safe haven. That assertion seems so obvious, that why it is the case is rarely explored. It does not seem to be a function, as some suggest, of its trade surplus, but rather its position as a net international investment surplus country. That means that Japanese investors own more foreign assets than foreign investors own of Japanese assets. In fact, Japan is the world’s largest creditor. Last year, it was in surplus by over $3 trillion. China is the world’s second largest creditor at about $2.2 trillion and Germany is in third place with a $1.2 trillion surplus. Next are Saudi Arabia and Switzerland
US real 10 year yields at record 225bpt discount to JGBs
PIMCO, the world’ largest bond fund call this suppression of yields financial repression because it means savers and bond investors get negative real returns. However, John Hempton pointed out that in Japan, where this monetary policy is well-advanced, deflation has set in and real yields are positive despite the zero-rate interest policy (ZIRP)
Notes from a Private Briefing with the Bank of Japan
The Bank of Japan held a private briefing with a small group of analysts from leading financial institutions in their NY rep office. The Director-General of the Research and Statistics Department led the presentation. This column summarises insights from that meeting
Mrs Watanabe has amassed a large short yen position
Something interesting is being played out. Margin traders–the famed Mrs Watanabe– at the Tokyo Futures Exchange–have amassed a large short yen position. There are about 900k short yen contracts as of today and about 364k are short yen against the dollar. This is the largest short yen long dollar positions since
How to Think about Currency Intervention Risks
Officials from Japan and Switzerland have stepped up their rhetoric protesting the price action that has propelled their respective currencies sharply higher. Contrary to market anxiety the risk of intervention remains low and lower for the SNB than the
“Don’t listen to Hugh Hendry. He’s a loser.”
Below is a nice little interview with Hedge Fund manager Hugh Hendry . The headline quote was his way of showing us he doesn’t take himself too seriously. But his underlying message is that he believes it pays to really massage the most contentious issues and take a view on those. If you do have a contrarian view, it will be backed by more rigorous analysis such that you can be better assured of a decent return in down markets. Right now, one of his most contrarian bets is Japan
Tankan and Beyond
Japan is set to release a slew of economic data on July 1. Of these the jobless rate is probably the least important. It is lagging indicator, though softness in the job-to-applicant ratio would warn of no quick improvement. On the other hand, the recovery in retail sales in May suggest overall household spending is beginning to recovery from the sharp contraction