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Things heating up over yen appreciation

When Peter Schiff recently said that Japanese policymakers were embracing a “strong yen” policy, one of my eyebrows raised a bit. Although Finance Minister Hirohisa Fujii has made it clear that he does not support currency intervention, I don’t remember hearing anything about a “strong yen” policy. As the Nikkei puts it:

During his bilateral talks with U.S. Treasury Secretary Timothy Geithner in Pittsburgh last week, Fujii said Japan would ”in principle” not intervene in the currency market.

”There is a sense of security in yen buying,” said Koji Fukaya, senior currency strategist at Deutsche Securities Inc. ”His remarks were perceived (by the market) as (Japan) accepting a strong yen,” he said.

Now Bloomberg is reporting Fujii’s contention that his statements were misconstrued: Read more

Peter Schiff on the rising yen and the dollar carry trade

But are Japanese policymakers really embracing a “strong yen” policy? Or has the media twisted up some quotes?

Nikkei: Store brands and online sales contributing to CPI spiral

Japan’s core consumer prices fell a record 2.2% in July, showing a fall for the fifth consecutive month. Earlier today, the Nikkei published a piece illustrating the negative effect that store brands and online sales are having on consumer prices. According to the paper:

Aeon Co. began selling a store brand 350ml soft drink for 29 yen this summer. Major discount chain operator Trial Company Inc. responded immediately, slashing the price of a comparable product to 25 yen at some of its stores. The company even lowered the price to 19 yen at stores in Aeon’s home base of Chiba Prefecture.

19 yen for 350ml soft drinks? I’ve never actually seen such a thing, but that is a remarkable difference from the usual 120 yen or so. Further pushing down consumer prices:

990 yen jeans by Fast Retailing Co.’s g.u. stores sparked a price-cutting frenzy that saw Daiei Inc. and other discount retailers sell jeans for 880-980 yen.

Just a couple of weeks ago someone tried to convince me of the virtues of $500 jeans. I wasn’t listening, but I have a hard time imagining $10 jeans to anything approaching comfortable.

Of course, Japan’s “core” consumer prices strip out fresh food but not energy, and when energy prices are stripped out July saw a 0.9% fall in “core core” CPI.

With its benchmark interest rate at 0.1%, the Bank of Japan has few weapons at its disposal to fight deflation. And when consumers expect lower prices in the future, you can bet that purchases are going to be delayed.

We will start to see the effect of dropping oil prices soon. Crude oil hit an all-time high of $147.27 a barrel in July 2008, and has lost about half of its value since then. However, oil prices have been on the rise recently, and firms may find it difficult to continue to pay higher prices for resources without cutting wages further.

Softbank to offer Armani handset

Softbank announced yesterday that it intends to launch a new Samsung handset designed by Giorgio Armani. The unit has a 2.2 inch OEL screen and a 3 megapixel camera, and will be available in either black or white models. Softbank claims that while in use, the phone will create a “night view” image by turning on blue, green and red LED lights.

Given that few people actually look at their phones while using them, that seems like an odd selling point.

From images on the Softbank website, the handset actually appears to be quite a pedestrian model. The address book and mail functions don’t seem to offer anything different to the Softbank model I purchased in late 2006 to replace the J-Phone model that I could no longer solder together.

Although Softbank will most likely not make public the number of units sold, it would still be interesting to find out how well this partnership works out.

Japan Consumer Confidence up for eighth straight month in August

According to data released Friday by the Cabinet Office, Japan’s Consumer Confidence Index rose to 40.1 in August, up from 39.4 in July. August was the eighth consecutive month in which the consumer confidence index has shown a rise.

The consumer confidence index itself contains five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. The overall score of 40.1 represents the first time since October 2007 that the index has come in above 40 points. Here’s a breakdown for August figures, with the change from the previous month: Read more

Nikkei: Panasonic offers best work environment

According to results of a survey released Monday by the Nikkei, employees of Panasonic enjoy the best work environment in Japan. Panasonic moved up one spot from the same survey conducted in 2008, thus regaining the top position. According to the paper, Panasonic’s male employees enjoy substantial time for child-rearing leave.

Panasonic was followed by Toppan Printing, which “tracks employees’ aspirations and efforts to improve their skills, such as where they want to be transferred, the training they have sought, and licenses and qualifications they have obtained, in a database, using the information to help workers enhance their careers.”

The top ten was rounded out by #3 Tokio Marine and Nichido Fire Insurance, #4 Hitachi, #5 Hewlett-Packard Japan, #6 Panasonic Electric Works, #7 Daiwa Securities, #8 NEC, #9 Mitsui Sumitomo Insurance, and #10 Daikin Industries.

Last year’s list was topped by NEC, Panasonic, Hitachi, Mitsui Sumitomo Insurance and Toppan.

Softbank outpaces DoCoMo, AU for new subscribers in August

Last month, we noted that in July, DoCoMo had ended Softbank’s 26 month run as the carrier enlisting the most new subscribers. That post questioned how long DoCoMo could stay at the top, and it seems the effect of its summer roll-out of new mobile handsets has worn off.

According to today’s Nikkei, Softbank announced it gained 115,100 new net subscribers in August, down from 137,600 in July. NTT DoCoMo slipped to second place in August, with 112,900 new subscribers, down sharply from its 143,600 figure in July. Amongst the big three mobile service providers, KDDI’s AU unit once again brought up the rear, netting 77,800 new subscribers in August. However, AU’s figure was solidly up from July’s 56,600, and it was the only one of the three firms to see a rise in the number of subscribers in August.

Nikkei: 52% of Tokyoites shop with e-money

In an article appearing in Tuesday’s Nikkei, the newspaper cited research by the Nomura Research Institute which found that about 52% of Tokyo residents use e-money for shopping. With Suica, Edy, Nanaco and Pasmo cards being accepted for payment at various locations in Tokyo, these results hardly seem surprising.

Still, Nomura’s report states that the percentage of e-money users in Tokyo was up 10% in June from a year ago. The Nikkei notes that the number of e-money cards issued (130 million) exceeds Japan’s population (about 127 million). Of course, this means that there are many people not using their e-money cards for shopping.

I would be one of those people who owns multiple e-money cards but has never used one for shopping. I’m not sure why, but I think my Pasmo card is used to take trains, and I have some kind of mental block against using it as a debit card at vending machines or convenience stores. Of course, this morning I went to recharge my Pasmo card but accidentally stuck my (Fuji Bank) ATM card into the ticket machine. Chaos ensued, and 15 minutes later the front had been removed from the vending machine and my card was pulled out, seemingly intact (I haven’t used the Fuji ATM card in five or six years, maybe it’s about time to find out if it still works, provided I remember the PIN).

Point is, e-money usage is growing, despite concerns over privacy. This is a good thing for consumers, who might like to carry less cash and still be able to make purchases. I’m not sure why the consumer loan companies have not yet begun to issue e-money cards, though they might not be far behind.

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