Word: yen
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...There are only suckers. In the long bull market that stretched over nearly four years, many investors who made five or six times their initial investment did not cash out in 2007. Some did not take even a small part of their gains and put them into CDs or yen futures. They just let the money ride which means that they assumed that the market was due to double again...
Handling that influx is what concerns the planners most at l'hôtel de ville, the city hall. Paris got a dose of overload when Japanese visitors, armed with the supercharged yen, arrived by the 747-load in the 1980s. Now think about Chinese and Indians arriving in similar numbers...
...Sony isn't the only iconic Japanese brand that is taking a beating. Beset by a domestic economy in recession, a yen that is gaining strength, and evaporating sales, manufacturers that have long been considered best-in-class by consumers are reeling. Toyota, the world's No. 1 carmaker by sales and profitability, recently announced that it expects to post its first operating loss in seven decades for the fiscal year ending March...
...About 40% of the cars Toyota sells in the U.S. are made in Japanese factories, and "due to significant yen appreciation, those exports are not profitable anymore," says Tatsuya Mizuno, an analyst at FitchRatings. It will take Toyota time to adjust its fixed costs, since it has spent the past several years investing aggressively to increase production capacity by about 500,000 vehicles per year in the U.S. "It's increasingly clear that the driving force [behind Toyota's recent growth] was really excess consumption in the U.S.," says Izumi of JPMorgan Securities, "and that's now unwinding...
...Japanese businesses and financial institutions, however, are in a good position relative to their foreign counterparts. Japanese companies have ample cash on hand at a time when cash and liquidity matter most. As mergers-and-acquisitions activity increases abroad, the appreciation of the yen (currently 90 to the dollar) can actually work in favor of Japanese businesses, making acquisitions more affordable as the market caps of their competitors decline. And banks, even with some financial constraints, are seeing lending increase, with growth of 3.7% in December from a year earlier. Positive news, to be sure, but not quite the stuff...