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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Chip McVickar who wrote (985)11/2/1998 1:57:00 PM
From: Paul Berliner  Read Replies (2) of 3536
 
Chip, it would be a smart move if they intervened now instead of later, as I have to believe that the Japanese exporting industry is of more immediate importance to that nation's welfare then the banking system, simply because the exporting industry employs so many more people than the banking system. Sony, Toyota, etc. have always been hedged against a stronger yen to some extent, but the recent violent move left them no time for adjustments to add to the positions. The result will undoubtedly be a rocketing unemployment rate in Japan as exporter profits are punished further and ultimately yield massive layoffs. Here we go again with the overproduction and oversupply issue - who will buy Hitachi's chips now that Intel's and AMD's are suddenly competitively priced, a picture that we have not seen in 2 years? I am sick & tired of reading all this nonsense in the financial press about how Japan has now bottomed and a bargain-hunting we shall go. It's ludicrous.

How can an exporting nation be better off when they were already miserable with a 20% weaker currency? Notice the insanity as to how a stock like Hitachi has soared the last few weeks - almost the antithesis as to what one would expect with the stronger yen! This bizarro style of trading must end. I guess if the yen were to go to 200 and Hitachi would enjoy its best results in years the stock would plummet then, right? But a Chmn. resignation and dismal outlook lead to a rally. The bank rally may be warranted upon optimism for the recapitalization plans, but the exporters should be suffering with the stronger yen.
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