Sharp gobbles NEC as Japan's display giants team up to take on Europe and North America

logicfish Business sharp gobbles japans display giants team take europe north america All https://go.theregister.co.uk   1 Comment    Share
Terms not revealed, but hopes are high that consolidation will be a good thing

Japanese display giant Sharp will gobble NEC's display business in a push to expand into North America and Europe.…


Japan's QE On Verge Of Failure As Nobody Wants To Sell To The BOJ

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Japan's QE On Verge Of Failure As Nobody Wants To Sell To The BOJ

Over a decade since central bankers started a stealthy nationalization of capital markets by purchasing a wide range of securities from Trasuries, to MBS, to corporate bonds, to ETFs and single stocks, their actions are finally catching up to them, and in the process breaking the very markets central bankers have worked so hard to prop up. And nowhere is this more obvious than in Japan, where the s

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hrinking universe of Japanese government bonds (as a reminder the BOJ now owns more than 100% of Japanese GDP in JGBs) is "causing havoc" in Japanese money markets as the Bank of Japan continues to buy while dealers refuse to sell.

The result is that rates in Japan's repo market, which traditionally connects holders of bonds with investors looking to borrow them, jumped to a record Tuesday (although they since retreated on Wednesday) because as Bloomberg notes, "the introduction of cheaper, more regular dollar-swap auctions has generated huge demand from U.S. currency-starved dealers who are keeping their JGBs to put them down as collateral."

So here is what the math looks like now that the Fed has launched enhanced swap lines with central banks such as the BOJ, allowing local entities to obtain dollar funding at much lower rates: in last week’s first round of the Fed’s revamped dollar-swap auctions, banks borrowed greenbacks for about 3-months at 0.37%, a massive discount to the near 2% it would cost them in the currency swap market. $32 billion was alloted in the first operation.

This huge difference in available borrowing costs, highlighted in yellow in the chart above, means JGB holders who still haven't offloaded to Kuroda are now unwilling to participate in the BOJ’s bond purchases.

This was readily apparent in Monday’s Rinban operation (i.e., Japan's POMO) across 5-to10-year bonds which saw the lowest offer-to-cover ratio on record, as dealers refused to sell to the BOJ! Other tenors also saw a sharp drop in the amount of bonds offered to sell.

"Demand for JGBs as collateral and its importance now is heightening." SMBC Nikko rates strategist Souichi Takeyama told Bloomberg. And here is the big problem that is now facing the BOJ: "There is little incentive to sell to the BOJ because there are more effective ways to make use of JGBs."

In other words, unless the BOJ provides dealers with a substantial "pick up" in principal relative to market prices, dealers will simply hold on their bonds as they can earn far more by simply renting the bonds out than purchasing any comparable securities. However, that would be frowned upon as it would constitute a clear subsidy to the local banks which, ironically, have been crushed in recent decades by the lack of net interest margin with the entire Japanese yield curve trading flat.

Making matters worse, the surge in demand comes at a time when the Bank of Japan is stepping up its own JGB purchases, in its bid to provide liquidity to financial markets grappling with the worsening coronavirus outbreak. However, with banks now openly refusing to sell to the BOJ, either the Japanese QE will fail, or bond prices will have to rise much more, pushing yields even lower, and further impairing bank interest margin calculations. On net, as Bloomberg notes, "that means less supply available for Japanese banks who have so far tapped over $150 billion in ultra-cheap dollar funding."

The bottom line, according to Takeyama, is that "there is risk that the BOJ offers may not get sufficient bids."

In other words, we may have finally hit a point where the market becomes self-stabilizing, as the very mechanism that central banks used to nationalize capital markets results in so much distortion that market participants no longer have an incentive to use it. In short, QE in Japan, which was first among the developed nations to hit the zero bound (and drop below it) and the first to exponentially ramp up bond purchases, is now on the verge of failure.

Tyler Durden

Wed, 03/25/2020 - 11:45

Japan's Abe Closes Schools Nationwide; South Korea Confirms 505 New Cases, Surpassing China For First TIme: Live Virus Updates

zerohedge News japans closes schools nationwide south korea confirms cases surpassing china first time live virus updates All https://www.zerohedge.com   Discuss    Share
Japan's Abe Closes Schools Nationwide; South Korea Confirms 505 New Cases, Surpassing China For First TIme: Live Virus Updates

US equity futures are pointing to yet another lower open on Thursday morning after WaPo interrupted President Trump's press conference last night to reports the first COVID-19 case "of unknown origin," which the CDC later confirmed was in Sonoma County, and could be the epicenter of America's first "community outbreak." Shortly after, Sou

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th Korea reported its largest number of new coronavirus cases in a single day, as the number of new cases reported outside China once again surpassed the number inside China. Brazil confirmed the first case in South America yesterday, bringing the virus to every continent except Antarctica.  

A few hours later, and South Korea has reported another 171 cases, bringing the total cases confirmed on Thursday to 505 - surpassing China's daily total (433) for the first time, as Bloomberg pointed out. So far, South Korea has confirmed 1,766 cases, along with 13 deaths, in the 38 days since the first case was reported on Jan. 20. The US and South Korea have cancelled planned military exercises after a US soldier caught the virus in Korea.

Over in Hawaii, Hawaiian Air has suspended service to South Korea starting March 2 through April 30, while Delta reduces flights as the outbreak in South Korea intensifies (Hawaii has already had one COVID-19 scare involving a Japanese tourist; we suspect the state wants to avoid a similar episode involving South Korea).

Fearing the sudden breakout in the Middle East might spread inside its borders, Saudi Arabia has halted pilgrimages to Islam's holy sites - known as the Hajj - that are a mandatory practice for Muslims. Across the Persian Gulf, Iran has now confirmed 26 deaths 245 cases. But given the virus's rapid spread throughout the Islamic Republic, many suspect that the real number of cases is far higher (earlier in the week, a local lawmaker said 50 people had died in the city of Qom alone).

Iran Health Ministry spokesman Kianoush Jahanpour said the large number of new cases is due to more labs handling virus tests. He warned that the public should expect more cases in the future.

Yesterday, Greece was one of eight countries - Brazil, Pakistan, North Macedonia, of course Greece, Georgia, Algeria, Norway and Romania - to confirm their first cases. On Thursday, Greece confirmed two more cases, one of them in its capital city of Athens. The initial case was found in Thessaloniki, Greece's second city.

Following Brazil's confirmation overnight, its Latin American neighbors are taking steps to stop the virus from spreading across their borders. According to the AP, Peru is keeping a team of specialists working 24/7 at Jorge Chávez International Airport. Argentina has asked citizens to report any flu-like symptom. Puerto Rico has established a task force to prepare for an outbreak in Puerto Rico. And Chile has announced a health emergency and purchased millions of masks and protective outfits for health workers.

But perhaps the biggest story overnight came out of Japan, where the government swore yesterday that the Tokyo Games would take place as scheduled this summer, after an IOC member speculated that if the virus wasn't cleared up by late May, Japan might be forced to cancel the Olympics.

PM Shinzo Abe asked all schools in Japan to remain closed until the spring holidays begin late next month to try and contain the virus. Abe's decision follows a rash of new cases reported in the north of Japan, including the first cases in Hokkaido, with no discernible path of origin, Nikkei reports.

As of Thursday, 175 cases have been confirmed across 19 of Japan's prefectures, including Hokkaido, Tokyo, Aichi, and Chiba. Earlier on Thursday, Hokkaido instituted a weeklong closure of all 1,600 public elementary and junior high schools. Abe made the announcement during a meeting of the government's headquarters.

Schools must now decide whether to abide by the PM's non-binding ask, though it's expected that nearly all schools will comply.

Chinese Premier Li Keqiang, President Xi's 'point-man' in charge of the coronavirus response, said that China will extend its school closures for another month because of the virus, according to CCTV.

In Australia, which confirmed a handful of cases during the early days of the outbreak, but has since gone quiet, PM Scott Morrison said Thursday in what some might describe as a 'fearmongering' speech that "there is every indication that the world will soon enter a pandemic phase of the coronavirus."

"As a result, we have initiated the implementation of the coronavirus emergency response plan. While the WHO is yet to declare the nature of the coronavirus and its move toward a pandemic phase, we believe that the risk of a global pandemic is very much upon us and as a result, as a government, we need to take steps to prepare."

WHO's Dr. Tedros, who yesterday asked officials not to use the word 'pandemic', must have been thrilled to hear Morrison's screed.

Morrison said Australians can still go "to the football match, or the concert" because Australia has "stayed ahead" of the virus. But now it's time to move onto the next phase, which includes "preparation for the possibility of a much more significant event."

Over in France, French President Emmanuel Macron said "we have a crisis before us. An epidemic is on its way" during a visit to a Paris hospital where coronavirus patients are being treated. His statement followed reports that 2 have died in France, an elderly Christian tourist and a 60-year-old French national. The Frenchman died earlier this week in Paris at the hospital Macron visited Thursday. The total number of cases in France reached 18 on Wednesday, roughly the same number as neighboring Germany.

Spain detected two more cases on Thursday, bringing the total this week to 14. Neither was connected to Italy, health authorities said. Switzerland confirmed 3 more cases, bringing its total to 4, though Swiss authorities said they're testing 66 others. In Italy, the number of confirmed cases climbed to 528. Of those, 278 are self-isolating at home, 159 recovered with symptoms in hospital and 37 are in intensive care.

As the AP reminds us, Germany’s health minister said Wednesday that the country was "at the beginning of an epidemic" as authorities in the west tested dozens of people. New cases on Thursday brought Germany's total to 21.

Two new cases confirmed in the UK on Thursday raised the total to 15. A primary school in Buxton was forced to close for "a deep clean" after a parent of one of the students tested positive for the virus.

The EU Commission doubled-down on its anti-border-closure position, saying no EU country wants to close internal borders. Meanwhile, the FT reports that EU officials are weighing the risks of clusters of Italian-style outbreaks surface across the continent.

Tyler Durden

Thu, 02/27/2020 - 06:51

How Fukushima Changed Japan's Energy Mix

zerohedge News fukushima changed japans energy All https://www.zerohedge.com   Discuss    Share

The 2011 Fukushima nuclear incident in Japan made international headlines for months, but it also changed Japanese attitudes towards nuclear energy. After a devastating tsunami hit Japan on March 11, 2011, emergency generators cooling the Fukushima nuclear power plant gave out and caused a total of three nuclear meltdowns, explosions and the release of radioactive material into the surrounding areas.

Before the incident, the Japanese had been known as steadfast supporters of nuclear energy, taking previous nuclear catast

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rophes at Three Mile Island (USA) or Chernobyl (Ukraine) in stride. But a meltdown on their own soil changed the minds of many citizens and kicked the anti-nuclear power movement into gear.

After mass protests, the Japanese government under then Prime Minister Yoshihiko announced plans to make Japan nuclear free by 2030 and not to rebuild any of the damaged reactors. New Prime Minister Shinzo Abe has since tried to change the nation’s mind about nuclear energy by highlighting that the technology is indeed carbon neutral and well suited to reach emission goals.

As Statista's Katharina Buchholz notes, despite one reactor restart at Sendai power plant in Southern Japan in 2015, nuclear energy has almost vanished from Japanese electricity generation. 

You will find more infographics at Statista

In 2016 (latest available), only 2 percent of energy generated in Japan came from nuclear power plants.

Coal and natural gas picked up most of the slack, but renewable sources, mainly solar energy, also grew after 2011.


Nuclear Is Japan's Only Choice For Energy Independence

zerohedge News nuclear japans only choice energy independence All https://www.zerohedge.com   Discuss    Share

Via Global Risk Insights,

Japan has adopted a peaceful approach towards nuclear technology, limiting it to the use of supplying electricity. This is despite being the only nation to have suffered devastating effects of nuclear warfare. However, the 2011 tsunami triggered an accident at the Fukushima nuclear plant and dramatically changed public sentiment with widespread protests calling for the abandonment of this energy source. The balance between these demands and the use of reliable and affordable energy supply is significantly conditioning Japanese pol

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Energy security in Japan

Japan relied heavily on imports of fossil fuels while recovering from WWII. This vulnerability became critical in the wake of the 1973 oil crisis and led to diversification in Japan’s energy mix towards a significant use of nuclear energy. 

This trend was sustained during the following decades and even increased at the beginning of the 21st century due to environmental concerns. For example, in 2008, the Ministry of Economy, Trade and Industry (METI) set the goal of reducing CO2 emissions by 54 percent by 2050, and 90 percent by 2100. This would lead to nuclear power contributing around 60 percent of primary energy consumption by 2100 and being responsible for 51 percent of emission reduction. 

However, in July 2011, after the Fukushima accident, the Japanese government decided to shut down all its nuclear power plants. As a consequence by February 2012, electricity costs increased by 15 percent. 

Figure: The trend of Power Generation Costs (Total for 12 Companies)

(Click to enlarge)

The cut in nuclear plants affected Japan’s trade balance. Between 2011 and 2013, the cost of importing energy resources into Japan was $40 trillion, and the total trade deficit between April 2011 and March 2014 was $227 billion. As a result, the government was forced to adopt the 4th Strategic Energy Plan in 2014 and declare that nuclear energy was a vital energy source that would continue being used under optimal security conditions to achieve a stable and affordable energy supply.

So, energy security is Japan’s main geopolitical concerns. As an island nation without indigenous energy sources, Japan relies heavily on imported fossil fuels. This overreliance on imports endangers the country’s energy system if a geopolitical event disrupts shipping to East Asia. The most likely disruptive events being a war between the United States and Iran, an open conflict with China over the Senkaku islands, or an attack (conventional or nuclear) from North Korea.

Japan’s energy future and the problem of public opinion

However, the most severe challenge facing policy-makers and the nuclear industry in Japan is the loss of public confidence in this type of energy. For instance, the 2015 Japan Atomic Energy Relations Organization (JAERO) survey found that 47.9 percent of respondents want nuclear power abolished gradually. 14.8 percent think it should be halted immediately.  Only 10.1 percent said that the use of atomic energy should be maintained and 1.7 percent said it should increase.  

These opinions have a bigger eco in the countryside where mayors or prefecture’s chief have informal veto power on the reopening of nuclear power plants, which at the same times is highly conditioned by electoral dynamics and popular support. 

In 2013, Abe’s government created the Nuclear Regulation Authority (NRA), an agency with an independent decision-making authority based on scientific and technological data, to develop new safety standards and boost public confidence for the nuclear reactors reopening process.

However, faith in nuclear energy has not been restored. According to a more recent JAERO study, the ratio of the public who trust the nuclear industry is 1.2 percent, and those who do not is 22.0 percent. The reasons for these figures are the lack of information disclosure, insufficient preparation and management on safety, and the perceived lack of honesty from industrials and public officials.

The problem of nuclear waste

The Japanese government must also find safe ways to manage stocks of irradiated nuclear fuel. By the end of 2016, Japan had 14,000 tons of spent nuclear fuel stored in nuclear power plants, filling about 70 percent of its on-site storage capacity. The law requires reprocessing of spent fuel to recover its plutonium and uranium content. But fuel storage in Rokkasho, Japan’s only commercial reprocessing plant, is nearly full, causing potential risks derived from the lack of storage space, such as the need to stop uranium reprocessing or halting nuclear power plants activity increasing like that Japan’s energy vulnerability. 

Other risks derived from excessive storage and conservation conditions can be leaks of irradiated particles, which represent a threat to public health. That’s why the construction of an interim storage facility in Mutsu is planned, however, in the medium term this problem will force Japan to move spent fuel to dry cask storage, and in the long term, it will need to increase this capacity and find a candidate site for final disposal of spent fuel.

Japan also has nearly 48 tons of separated plutonium. Just one tone of separated plutonium is enough material to manufacture more than 120 nuclear weapons. Many countries have expressed concern about Japan’s plans to store plutonium and use it as nuclear fuel. Some, such as China, fear that Japan may use the material to produce nuclear weapons rapidly. Consequently, maintaining this policy could increase security concerns and regional tensions, and could stimulate an arms race in East Asia.

The geopolitics of nuclear energy

Although only nine of Japan’s 38 commercial reactors are currently functioning, the government and the nuclear industry hope to be able to solve much of the problems associated with this sector by exporting energy and infrastructures to foreign markets. For the Japanese government, this is a critical component of its program to boost economic growth, and for the Japanese nuclear industry, this is the last hope to do business after Fukushima. 

Companies like Toshiba, Hitachi and Mitsubishi, entered foreign markets with the help and support of the Japanese government. Japan’s public-private partnership to build nuclear power plants is a lucrative opportunity that could position Japan as one of the world’s leading energy suppliers in the future. After all, nuclear power is in demand in countries such as Turkey, Poland, Bangladesh, Pakistan and Argentina, that are eager to reduce CO2 emissions and increase their energy security.

At the same time, demand for reactors appears to be stable worldwide. In particular, China and Russia have been vigorously entering foreign markets in recent years through their state-owned companies. For example, Rosatom announced last year that it had acquired contracts to build 35 new reactors, 67 percent of the world total. Chinese and Russian state-owned companies have been supplying nuclear material at lower costs than Japanese and Western ones, which has pushed up fossil fuel prices and raised national security concerns in many countries. This is why in 2017 a memorandum of understanding was signed between Japan and the United States to promote the global leadership role of both countries in the field of civil nuclear energy to counter Chinese and Russian dominance of the global nuclear energy market.

General assessment and foresight

Since Fukushima, the reopening of nuclear power plants in Japan has become more difficult in many ways. The Japanese government has adopted much stricter safety measures, and the nuclear industry has had to fight tirelessly to regain the confidence of the Japanese people.

In the coming years, the public acceptance of nuclear energy among Japanese local and regional leaders will be highly likely for environmental and employment reasons. However, the process of recovering Japan’s public support for nuclear energy is expected to take several years. The Nuclear Regulation Authority appears to be a credible and effective voice for public acceptance of the reopening of nuclear power plants. However, it is essential that this agency maintains its role as an impartial, fact-based entity to maintain its credibility with opponents of nuclear energy. 

On the other hand, Japan will need to make significant strategic efforts to develop alternative energy sources. To bring its energy self-sufficiency rate back to the 2010 level or even higher, an optimal combination of renewable and nuclear energy is imperative.

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