Rebirth 79: I opened a bank in the United States

Chapter 779 Precursor to the "Plaza Accord"
"Put political pressure on Japan first to force the other side to release exchange rate controls. Whether it is adjusted by the international market or artificially increased, the appreciation of the yen will lead to a decline in the profitability of Japanese companies!"

On the weekend of this week, in a leisure area on the 58th floor of the Red Hat Building in New York, where Vision Capital is located, by the large French windows, Carter, Rick, Julian, Rogers, and Manager Powell of the Black Flag Commercial Bank, so A few people sit around a room.
"First cut off the current momentum of rapid development of Japanese companies, and the second step is to loosen exchange controls. As long as they can exchange large amounts of yen without restriction, there will be plans for Japanese companies, including Hitachi Manufacturing. possible!"

"But it is worth noting that, with Hitachi as the representative, I recently focused on the movement of the New York Stock Exchange. The trading volume has not increased much."

Putting down the coffee in his hand, Carter proposed a somewhat abnormal situation.

After Hitachi Manufacturing Co., Ltd. was listed on the New York Stock Exchange in 82, until now, the financing situation is not optimistic.Of course, this is only in the United States. On the three stock exchanges in Tokyo, Nagoya and Osaka, Hitachi performed very well.

"I heard from friends in Japan that Hitachi seems to be planning to list on the two Japanese stock exchanges in Sapporo and Fukuoka recently to broaden its financing channels."

"Not so fast, even if the situation is as you two young people expected. The federal government will take action, and then negotiate with the Japanese, come up with a plan, and implement it for a year or two. This matter will never be done!"

Julian shook his head with some amusement, looked at the two eager young men around him, and then at Jim Rogers.As if to say, don't you care about your junior?

And Jim Rogers just shrugged and didn't take issue.

"one or two years"

The speaker has no intention, but the listener has the heart.
Two years later, isn't that the Plaza Accord
Could it be that the Morgan report is just the prelude to the Plaza Accord, or the trigger? !
"I understand this, but before this big wave comes, I wonder if some small waves will come early"

"Oh? What little wave?"

"For example, the short-term appreciation of the yen, strictly speaking, is the short-term appreciation of the yen in the US market!"

"Speculation?"

"Speculation!"

In today's environment where there are quantitative controls on the exchange of the yen against the US dollar, and because of the existence of a trade deficit.The United States is relatively short of yen!

In the past environment, only the yen was needed for product transactions, and there would not be a large number of runs in the short term, and there would be no strong blockage in the exchange of the yen.But now, after judging that the U.S. federal government will put political pressure on Japan with a high probability to force the yen to appreciate
It will be more expensive to exchange yen in the future, so now, can you take advantage of the low yen and exchange more, and sell it after it appreciates?

This logic is easy to understand, as long as more investors know and believe that the yen will appreciate, it will rise!So.
This will cause a sudden increase in the exchange rate in the short term, and even directly trigger the current exchange control in Japan. For example, after remitting a certain number of yen, the Japanese side will suspend the exchange.

Once this circuit breaker-like mechanism was triggered, Japan stopped the outflow of yen.It means that the supply chain is cut off, so when there are still a large number of speculators in the United States who need and want to hoard these yen, will those yen currencies appreciate?
Most likely it will!

"I don't think so. The emotional side of this matter may not be that big! Or, except for some people in related industries who may be interested in this report, a large number of retail investors should not pay too much attention to this report." One piece. In particular, there are not many retail investors in the foreign exchange market.”

After thinking carefully about Carter's words, Jim made an objection.

"That's right, if there are no retail investors, simply institutions should not bet on this risk. Even if there is a short-term run on the yen, causing the Japanese side to stop the exchange of the yen, there will always be more or less yen still in circulation on the market. Some, don’t forget about Europe! The room for short-term appreciation may not be large!”

"And the policy risk is too great. If the Japanese side suddenly releases water, this high price range will be too short. The window period will be extremely short. Doing such speculation, some gains outweigh the gains and a little slower, it may be a large number of days that return to normal values. The yuan currency is in your hands! Maybe there will be no book losses, but the time cost is wasted!"

Looking at Carter again, Julian seemed to have guessed something.
"Even if you have some inside information or some resources to hype up this wave of sentiment, I still suggest you not to do it. Because, if I am the Bank of Japan, even if the government is forced to compromise, before the formal agreement is issued, I will also open up the money printing machine to maintain the low yen advantage. I can buy as much time and space for my own business as I can!"

"Issuing additional yen currency to keep the price of yen at a low level is used to help domestic companies gain a competitive advantage in the market. But in this way, these currencies"

Today, a large amount of currency is used to suppress the value of the yen, but it will also cause a huge increase in the amount of currency in circulation.And isn't this a precursor to another phenomenon?
Too much money chasing too few goods in the market
inflation!

After the Plaza Accord, perhaps the public's attention was mainly focused on land prices and stock prices, but prices. Carter believes that Japanese prices must have been soaring during that time!

Moreover, foreign exchange is always a relative concept.Take the US dollar and Japanese yen as an example, the appreciation of the yen means the depreciation of the US dollar, which is like a seesaw, or leverage!

And the current situation of the US dollar, is it reasonable?

Not reasonable!

Under the leadership of Volcker, an American ruthless man, the Federal Reserve raised interest rates frantically.Not only the federal funds rate is frighteningly high, but the interest rate on long-term U.S. treasury bonds is also ridiculously high!
The ten-year treasury bond interest rate is as high as about 13%, and the peak value exceeds 15%. You may not feel much just looking at the numbers.It can be compared with the interest rate in normal years, a few percent, and a few percent.
This number is a bit scary!

High treasury bond interest rates have attracted a large amount of capital to flow back into the bond market.In this way, it will lead to a decrease in the number of dollars circulating in the market, that is, too little money chasing too many commodities
Deflation!The dollar strengthens!
On either side of the seesaw right now, the yen is undervalued and the dollar overvalued.At this time, if Japan issues a large amount of currency, it will wait until the value is corrected.
Carter got it!

No wonder the Japanese chanted the slogan "Buy America"!
As an island country as big as Japan, it is impossible for domestic demand to be large.This kind of domestic demand is not only the demand for goods, but also the demand for money.
So right now, if the Bank of Japan opens its money printing machine.
If there is a way to maintain price stability, it means that there will be a large amount of yen, which cannot be circulated in the Japanese consumer market.Without circulating in the consumer market, the money can only go to a few places:

Stock market, property market, and foreign investment!
A big net is quietly spreading
(End of this chapter)