Volkswagen will become the world’s biggest carmaker this year – a full seven years earlier than its management’s aim to replace Toyota in the industry’s top spot, according to three leading consultancies. The FT reports forecasts show that VW’s relentless growth around the world, coupled with Toyota’s supply-chain problems after this year’s earthquake in Japan, mean the German automaker will claim the number one spot for both sales and production. The result, if borne out by year-end tallies, would mark an upset in an intensely competitive industry where Toyota and General Motors have for the past several years vied for the title of biggest. However data released on Monday showed Japan’s exports rose more than expected in September, says Bloomberg, increasing 2.4 per cent from a year earlier as demand for cars and auto parts rose. Exports have rebounded as companies including Toyota restored production after the March 11 earthquake and tsunami damaged factories and caused parts and power shortages. Read more
Japan’s exports rose in June and the pace of annual declines slowed, Reuters reports, bringing the trade balance back into surplus as factory output and sales steadily recover from the March earthquake, tsunami and nuclear meltdown. Exports were 5.4 per cent higher than in May, Ministry of Finance data showed on Thursday, and 1.6 per cent lower than June 2010 — less than a median forecast for a 4.1 per cent annual decline. The WSJ says the figures confirm views from government and private sector economists that Japan’s economy is recovering faster than expected from the disasters that began in March. Read more
Japan’s divided Diet has passed legislation to pave the way for the reconstruction of tsunami-devastated areas along the north east coast, reports the FT. The new legislation mandates the creation of a reconstruction agency and appointment of a minister to oversee the recovery from the March 11 disaster, which killed or left missing more than 20,000 people. Read more
Sony has posted a Y260bn ($3.18bn) net loss for the year ended March 31 due to the impact of Japan’s quake and tsunami and the hacker attacks that forced it to shut down its PlayStation Network, the Japanese electronics company revealed in a preliminary earnings statement Monday, the FT reports. The company had called a news conference on Monday for 5.30pm local time to announce the revision. Companies listed on the Tokyo Stock Exchange are required to inform investors if they believe they will miss earnings targets by 30 per cent or more. Sony was scheduled to report fourth-quarter and full-year results on Thursday. Analysts had been expecting a Y76bn profit and the company had forecast net income of Y70bn. Read more
The March 11 earthquake and tsunami caused Y2,000bn ($25bn) in damage to plant and equipment at Japanese companies and left many too uncertain of their business prospects to issue forecasts for the current fiscal year, according to recent earnings reports, says the FT. The disaster wrecked factories and infrastructure along the country’s north-eastern coast, creating shortages of industrial components that disrupted production of cars and electronics far beyond the stricken region. Read more
Nissan Motor is likely to become the first Japanese manufacturer to issue corporate bonds domestically since the March 11 earthquake and tsunami amid strong investor demand for private sector debt, writes the FT. Yields rose sharply higher after the disaster, exacerbated by the ongoing crisis at Tokyo Electric Power’s nuclear plant in Fukushima, which prompted rating agencies to cut Tepco’s long-term debt rating several times.
Given the scale of the original reaction to troubles at Japan’s Fukushima-Daiichi nuclear plant, it’s interesting to see the degree to which uranium ore prices have stabilized since March. Especially since the crisis itself is doing anything but.
Indeed, via RBC Capital markets on Wednesday: Read more
Breaking pre-market news on Wednesday,
- Bank of America to spin off private equity unit – FT. Read more
Toyota and Ford will shut factories this month and next, as supply disruptions from the Japanese earthquake ripple through to operations in Asia, Europe and the US, reports the FT. The latest production slowdowns are affecting factories as far apart as Turkey, Poland and the Philippines, underscoring the vulnerability of carmakers to shocks in the global supply chain, more than a month after the earthquake and tsunami hit. Read more
The Fed’s latest Beige Book mostly confirmed what was already known about the US recovery: continuing moderate growth, labour markets gradually improving, raw materials and energy costs putting pressure on prices, wages remaining subdued, etc…
To us, the most interesting parts of the the report were those that shed a bit more light into how the Japan disaster affected various Fed districts. We’ve posted below a few excerpts from the districts that have commented on its impact (emphasis ours in all cases). Read more
A powerful aftershock sparked further anxiety in disaster-hit northeastern Japan one month after the huge earthquake and tsunami that devastated coastal communities and sparked the world’s worst nuclear crisis in 25 years, reviews the FT. Amid growing concerns about the long-term health risks posed by radiation-leaks from the Fukushima Daiichi atomic power station, the government announced plans to widen evacuation zones around the crippled plant to beyond the previous 30km limit. Read more
Details remain hard to come by after the 7.1 earthquake that hit Japan late Thursday night local time, but recent flashes from Kyodo News indicate that its damage has thus far been limited, though a tsunami warning has been issued for the northeast coast where it hit:
As for the earthquake’s impact on the Fukushima Daiichi power plant and other nuclear facilities, the FT has a bit more: Read more
Here’s the movement in the yen since the Japan earthquake on March 11:
Japanese nuclear technicians plan to release 10,000 tonnes of moderately radioactive water into the sea from Fukushima Daiichi nuclear station to create room to store more highly contaminated water building up under the crippled plant, reports the FT. A manager at Tokyo Electric Power (Tepco), the station’s operator, broke into tears while announcing the emergency measure on Monday, and apologised for the “additional hardship” being placed on communities near the plant, 240km north of Tokyo. Read more
The utility company at the centre of the worst nuclear accident in 25 years has said it would ask the Japanese government for financial support as it faced a prolonged battle to contain radiation leaks from the stricken Fukushima facility, reports the FT. It was the first time since the earthquake three weeks ago that Tokyo Electric Power had indicated it might not be able to fund the cost of the crisis on its own. Last week the company raised $25bn from three of Japan’s largest banks in emergency funding while saying that it had “sufficient liquidity”. Read more
Dangerously radioactive water has leaked from Japan’s crippled Fukushima Daiichi nuclear power station, in the latest breakdown of containment systems at the plant battered by an earthquake and tsunami, reports the FT. Tokyo Electric Power, the plant’s operator, said on Monday that a network of underground maintenance tunnels connected to the four most damaged reactors had been flooded close to overflowing with the highly contaminated water. Read more
Contrary to popular myth — goldfish have a memory capability that spans months.
But that doesn’t stop Nomura’s chart of the day, titled “markets’ goldfish memory,” from making its point. Assets have very quickly reversed their post-March 11 moves. Read more
Fears over the impact of radioactive contamination in Japanese food supplies spread to Tokyo’s tap water on Wednesday after the US banned milk products, fruit and vegetables from areas near the stricken Fukushima nuclear power plant, reports the FT. Japanese authorities said the level of radioactive iodine found in Tokyo’s tap water was double the recommended limit for infants and advised against using the water for mixing milk formula. Read more
The power company at the centre of the world’s worst nuclear crisis in 25 years is tapping Japan’s biggest banks for an emergency loan of up to Y2,000bn ($25bn) as it faces escalating clean-up and rebuilding costs, reports the FT. Engineers from Tokyo Electric Power have been struggling to contain the situation at the Fukushima nuclear plant since it was damaged beyond repair by this month’s devastating earthquake and tsunami. On Tuesday the Japanese government estimated total rebuilding costs from the twin natural disasters at Y25,000bn – almost 5 per cent of GDP and dwarfing the Y10,000bn spent after the country’s 1995 Kobe quake. Read more
Not that “official” = “accurate”, of course.
Seemingly everyone else has had a go; now the Japanese government has put forward its own estimate for the ultimate economic cost of the earthquake and tsunami. Read more
Here’s a quick supplement to FT Alphaville’s post on Friday about post-earthquake flows into the iShares MSCI Japan fund.
Citigroup confirmed in a note on Friday that the flight from disaster took place everywhere but the disaster site: Read more
We’ve brought you an update of the situation at Japan’s strickent Fukushima nuclear power plant. So here’s a bit more from JPMorgan economist Masamichi Adachi
In terms of the macroeconomic impact in the aftermath of the earthquake and tsunami, and amid ongoing efforts to contain radioactive leakages at the Fukushima nuclear plant, Adachi says the immediate concern is the supply chain disruption. Read more
Japan has widened a ban on shipments of spinach and milk from areas around the crippled Fukushima Daiichi nuclear power station, after levels of radiation found in samples exceeded legal limits, reports the FT. Other countries including China and South Korea have stepped up monitoring of food imported from Japan. Tokyo Electric Power will compensate local farmers, the FT adds. Read more
The repatriation effect on the yen is being closely watched by analysts all over the world following the Tohoku temblor and subsequent Bank of Japan intervention.
As most have commented this is on account of the patterns that followed on from Japan’s Kobe earthquake in 1995, which also saw the yen rise relative to the dollar. Read more
Just when I thought I was out, they pulled me back in.
Into a global liquidity push, that is. Even as other central banks are very slowly heading for the exits (again?), the Bank of Japan last week unleashed some ¥28,000bn of liquidity as it sought to avert an earthquake-sparked credit crunch. Read more
The Bank of Japan unleashed ¥28,000bn ($345bn) of fresh liquidity through its emergency quantitative easing operations over the course of the past week.
Which means we’re already not far off from the ¥34,000bn that the central bank was pumping into the market at the height of its QE programme back in 2004/2005. Read more
What’s that saying?
You wait for a Black Swan for ages and then three show up at the same time? Read more
So it begins.
The first research we’ve seen quantifying European bank exposure is out to Japan following last Friday’s terrible earthquake and subsequent nuclear problems is out. Read more
It’s a worse-case scenario — Japan’s “slow motion” Chernobyl.
Speculation that Japanese insurers will have to sell foreign assets like US Treasuries to meet earthquake damage claims is not gaining traction at home, the FT says. Market participants in Tokyo say insurers have plenty of cash reserves to meet claims, and that liabilities of life insurers would be limited by Japan’s earthquake reinsurance scheme. See also FT Alphaville on Mrs Watanabe, repatriation and a global market dislocation. Read more