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Author: JustMee01 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 18123  
Subject: Re: Storm Cloud for US Automakers? Date: 6/19/2013 9:07 AM
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So many of their cars are assembled here, how much of an impact does it have on prices in the US? What percentage of their parts are Japanese sourced? Some lines (the Prius, right) are still made there, but many are made here already. So, no big currency impact...

That's an interesting question that doesn't seem to have an easy answer. You always find newspaper articles claiming that some foreign nameplates' cars have more US sourced parts than some domestic models. How much do you really think this impacts the big global brands? They're more locally sourced in all of their markets. The other impact could be a return to more Japanese sourcing.

That's my impression anyway.

The big boost would seem to be to Japanese automakers like Mazda that lack a lot of foreign factories; especially in Southeast Asia. The ones that have to be the most worried are the South Koreans.

It's definitely a thing to watch, especially on the coasts, where Toyota would be more inclined to dump to protect share.

The Japanese bond market hasn't exactly been responding as smoothly as anticipated, either. The BOJ's (Bank 'o Japan) been buying, but sellers are unloading into it. Aflac, which has a huge Japanese presence, has been unloading JGBs (Japanese Govt Bonds) for a while, and moving their port to currency-hedged US corporate bonds and other alternatives. The yield is so small already that this is getting absurdly punitive. If it causes more institutional movement away from the market, it could stress the program.

Can the BOJ be as dominating as the almighty Fed? The Fed's biggest advantage is that the Treasury market is the market of last resort. It can't be marginalized because it's so damn big. It's the 800 pound financial gorilla. Whether or not the BOJ can be as successful is an interesting question and bears watching. If you're a believer in the BOJ, it makes the DXJ look interesting long term, after its short term retreat.

Peter
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