Finimize - 🇯🇵 Japan goes quiet...

What’s going on here?

Apple will begin pulling its latest smartwatches off the shelves in the US this week, because of a patent dispute, potentially foiling the plans of last-minute holiday shoppers.

What does this mean?

US regulators called time out on Apple back in October, saying it’d violated the rights of a company called Masimo with tech that measures watch wearer's blood oxygen levels. The decision meant its top-end Series 9 and Ultra 2 smartwatches could be banned starting on December 25th. Apple says its festive-season sales will still be strong. If the ruling sticks, the real sales blow would hit in January and February – two of America’s slowest retail months.

Why should I care?

For markets: Timing is everything.
The controversy couldn’t have come at a worse moment for Apple: the firm’s already dealing with widening iPhone bans across China. So it won’t be happy about pausing sales of its Apple Watch – a serious moneymaker, fetching about a fifth of its earnings. And since the issue is with hardware patents, Apple can’t just shuffle it away with a quick software update like it’s done before. So it’s got to hope for a White House intervention, a successful appeal, or a deal with Masimo. Short of that, the company will have to redesign the devices to sidestep the protected tech – and there’s no telling how long that could take.

The bigger picture: Watch this space.

Apple is worth as much as the entire French stock market, or the total economy of Australia. But it didn’t come by that heft simply by selling sleek gadgets: the firm’s been steadily encroaching into other industries, competing with streaming companies, payment providers, and – yes – medical device makers. It’s also got its sights set on autos. And it’s not alone in looking far afield: as tech giants sprawl across sectors, regulators may be asked to intervene more often. Apple’s flexing some muscle, and the rules might just have to catch up.

What’s going on here?

The Bank of Japan (BoJ) held the country’s negative interest rates steady again on Tuesday, saying it’s in no rush to shift gears.

What does this mean?

The BoJ’s been chilling in the sub-zero zone, even as its peers have gone hiking. That’s because Japan’s been actively working to nudge prices higher, after two decades of growth-crushing deflation. So it might not have come as a huge surprise that the Bank maintained its -0.1% status quo and its title as the only major economy with a negative lending rate. But it did stoke some disappointment. Inflation in the country has been stuck above the BoJ’s 2% target since April of 2022, and investors were hoping the central bank would finally offer some insight about when it might start raising interest rates to cool those price rises. But it did none of that.

Why should I care?

For markets: Silent type.

With little to go on, aside from the BoJ’s ambiguity, investors assumed that hikes are still in no way imminent. That rattled through markets on Tuesday, sending Japanese bond yields and the country’s yen lower. After all, the prospect of lower-for-longer interest rates makes the currency less attractive to international investors and savers. Japan’s stocks, on the other hand, got a boost from the news, since cheap borrowing costs and a weak yen are good for big Japanese companies that sell their goods overseas.

The bigger picture: Easy does it.

The Bank’s decision not to say much this week may well be a deliberate one, considering its policymakers are facing a difficult balancing act. Abandon the negative interest now, when other major central banks are lowering their rates, and they could trigger a flood of investment into Japan, strengthening the yen. That, in turn, would slash the costs of imports into the country, potentially revitalizing that old deflation foe and undermining decades of BoJ effort.