Breakingviews

“Seller beware” when profiting from market calm

July 10, 2014

Volatility, gauged by indicators like VIX, is ultra-low. While it could be the calm before a storm, investors including Pimco have been selling insurance against price swings. It’s one way to make money amidst shrinking yields, but it’s also a risky bet against the unexpected.

U.S. protests won’t stop Japan’s yen meddling

December 29, 2011

The Treasury has rightly criticised Tokyo for weakening the yen. Currency intervention has limited impact, and exporters have learned to live with a strong yen. But fears that traders see the yen as a one-way bet mean more meddling is likely, whether Washington approves or not.

Euro faces slide on break-up risks

May 10, 2012

The single currency has held up remarkably well thus far. But a more hasty retreat against the dollar, pound and yen is on the cards. A Greek exit poses the chief near-term risk. Any resulting contagion will be hard to handle because of the divide between France and Germany.

Risk appetite set for brutally hot Spain vacation

July 23, 2012

Distress in Spanish regions and new fears for Greece have broken the markets’ summer calm. Italy’s spreads have overtaken Ireland’s. Until external support for Spain is clarified, stocks, commodities and the euro may pay. Yet again, the dollar, yen and safe-haven bonds will win.

Abe era will herald a three-digit yen

December 17, 2012

Japan’s newly elected prime minister will slay the currency to save the economy. That means it will make the kind of move it made after Lehman collapsed in 2008 – but in reverse. Then, risk aversion saw the yen rise 20 percent. In 2013, a U.S. dollar will buy 100 yen or more.

Ten ways to tell whether Abenomics is working

April 15, 2013

Shinzo Abe is a man in a hurry. Japan’s new prime minister wants to pull the economy out of its deflationary hole with aggressive fiscal and monetary easing. But is his plan working? Breakingviews’ new index allows you to combine ten indicators to track the progress of Abenomics.

Weaker yen won’t halt Japan Inc’s overseas spree

April 16, 2013

A strong currency and stagnant home market spurred companies to a record number of foreign purchases last year. Domestic stimulus and the yen’s slide have prompted dealmakers to pause. But Japan’s ageing, shrinking population means corporations must still hunt abroad for growth.

IMF crowd should cut Japan some slack

By Christopher Swann
April 19, 2013

Prime Minister Shinzo Abe’s economic policies are in for a drubbing at the fund’s spring meeting. IMF officials bemoan Japan’s “risky” fiscal stimulus while America grumbles about the yen. But Japan, which is one of the IMF’s staunchest supporters, was right to act.

Return to glory days may elude Japan’s automakers

April 24, 2013

The falling yen will boost earnings and market share. But compared to 2006, Japan ships fewer cars abroad, margins are narrower, and U.S. rivals are no longer in a mess. Toyota’s market value is unlikely to overtake that of its eight main western competitors combined again.

Three-digit yen no longer a one-way bet

May 9, 2013

The Bank of Japan’s money-printing promise has pushed the currency above 100 to the U.S. dollar for the first time since 2009. Prime Minister Abe’s radical plans point to further depreciation. But concerns about import prices and currency wars will counter any prolonged slide.