Why Japan Plans to Release Low-Radiation Water
This week, we talk about Japan’s decision to release low-radioactive water from Fukushima and the first corporate earnings season that can compare to the start of the pandemic.
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Hi, Maitane. At the site of the 2011 nuclear meltdowns in Fukushima, storage space for radioactive water is running out. That is why the Japanese government has decided to release some water with low radiation levels into the sea in the coming years.
The decision has raised a lot of eyebrows. But the Japanese government says the level of radiation in the water is a tiny fraction of what people are exposed to in everyday life.
Local fishermen are still worried. Fish industry officials say that even rumors about the radioactivity could hurt sales.
Tokyo Electric Power, known as Tepco, could end up on the hook. Japan’s government says Tepco, which ran reactors that melted down after a tsunami in 2011, would pay compensation if bad publicity hurts fish sales. Tepco confirmed this week they would pay for any reputational damage.
That could prove another hurdle for Tepco. The company’s stock is far from the levels it was at before the meltdown. (See the chart below.)
The water’s coming release has also added to tensions with China, which criticized the decision as “highly irresponsible and will severely affect human health and the immediate interests of people in neighboring countries.” While the Japanese government says that the radioactivity levels aren’t dangerous.
Still, the release of the water won’t happen for a while. Officials said it will take around two years to finish preparations. Now let’s take a look over at what investors will be watching for.
Corporate earnings season kicks off this week. It is a big deal because companies will share financial results that can be compared to when lockdowns began in March 2020.
Investors expect earnings to leap for the quarter and said they will especially eye the results from America’s big banks. Last year, to prepare for the economic pain caused by the pandemic, banks had to set aside billions of dollars to cover potential losses on loans.
Banks are expected to free some of those rainy-day reserves, which could help them post a jump in first-quarter profits. For example, JP Morgan Chase, which reported earnings before the market opened on Wednesday, said its first-quarter profit nearly quintupled after it released the $5.2 billion it had set aside. Wells Fargo’s earnings also jumped after it released $1.05 billion from its reserves.
The performance of the KBW Nasdaq Bank Index, which tracks the shares of the largest publicly-traded lenders in the U.S., offers a snapshot of investor sentiment. The index is up more than 20% this year.
What am I looking at? The chart above shows the performance year-to-date of the KBW Nasdaq Bank Index, which comprises 24 banking stocks, including big bank players such as JP Morgan, Wells Fargo and Bank of America. Banks are seen as proxies for the health of the U.S. economy.
I am pretty sure you and I will be covering some of those banks ourselves. Their earnings might signal that the U.S. economy is turning the corner.