Financial crises like the one we are enduring tend to have a mind of their own. While the talking heads on TV will quote historic recessionary trends or technical trading wisdom, their market wisdom is rarely wise.
Just as no two bull markets are the same, no two bears are alike. If they were, figuring out what will happen tomorrow, or the next day, or next year would be easy.
But we are not that lucky. Every day, we are given new variables, new moves by global governments, and new investor interpretations. Combine the seemingly infinite number of variables and you will get a financial environment like we have never seen before.
Look at what we have today. The credit markets are still ultra-tight. Economies across the globe are are declining at incredible rates. The United States, where this mess started, is actually one of the financially strongest economies and our currency is jumping in value.
And so is Japan’s yen. It has risen nearly 20% versus the American dollar and over 30% to the euro and the British pound.
Worth more is worthless
Japan’s currency valuations are starting to worry economists. As a huge global exporter, an expensive Japanese currency will mean expensive Japanese imports.
Last Friday, the yen jumped so high, one American dollar would buy just 90 yen, a 13-year high. The surge in value and the downturn in global demand are coming at exactly the wrong time for the country, creating a one-two economic punch.
Japan’s stock market has been destroyed by the crisis. After dropping more than 6% over the last day, the Nikkei index hit lows that it has not seen in 26 years.
There are plenty of Japanese manufacturers suffering from the downturn. Sony (NYSE:SNE), which earns the vast majority of its revenues
