Let's think this one out on the fly. Lower yen good for Japanese exporters to the world, bad for world exporters to Japan. Foreign trade is actually not that a big component of Japanese economy and its economy will, faster or slower, recover at its own pace. Export (especially to Japan), similarly, is not that great a component of the US economy and the US economy will go its own way, faster or slower. So, I figure, at the end of day, bottom of valley, top of hill, the Yen:US$ exchange rate is tied to capital flow and relative interest rate, which in turn is tied to overall direction of the respective economies.
US economy is healthy, inflation almost invisible, equity markets possibly but not necessarily frothy on sector by sector basis. US savings rate is somewhat worrysome, but as long as paychecks coming in, the spigot can remain open for a while longer. Relative interest rate, in the absence of inflation, remain at highs. Fed raising rates higher independent of bond market will not do much, as Government is at surplus (however dubious the accounting) and are not competing for funds. All in all, situation is OK.
Japanese economy will, by and by, recover. Recovery is preceded by a flood of liquidity due to money spigot opened by government and by trade surplus, interest is zip.zip, with no place to go but up as economy recovers. But so what? I would imagine the weight of Japanese internet growth will far outweight any 20-30 % Yen value shift against the dollar in either direction. 9984 holding in US will grow in value or decline in value on its own, independent of value of Yen, 9984 assets in Japan and international will grow in value independent of the Yen. Most of the value is in "value of growth" as opposed to "value of fixed assets". Bottom line conclusion, should temporary insanity sink 9984 directly due to exchange rate shift, we buy more. Similarly, should 9984 value rise solely on basis of exchange rate shift, we trade. In the past weeks, Yen had risen, and in theory, US$ holdings of 9984 would somehow be worth less in Yen. No sellers in Japan, therefore 9984 rose.
Remember, as Yen sinks, 9984 debt to equity picture improves (balance sheet outweigh income statement in venture capital game), and as Yen rises, Japan economy would be the cause (i.e. improving vis a vis US) and 9984 income statement prospects improves. Heads we win and tails we win more. I think. |
