Japanese Prime Minister Shinzo Abe on Thursday is due to become the first head of state to meet with president-elect Donald J. Trump after his shock election.
The meeting makes sense for both leaders. They have plenty to discuss. Trump advisers have said he plans to use the talks to reassure Japan and the rest of Asia of his intentions, after his fiery anti-trade and protectionist rhetoric on the campaign trail.
The United States and China may be the world's biggest and second-biggest economies. But Japan ranks third, and is a staunch political and military ally of America in Asia, where the two need each other to balance China's rising influence in the region.
The U.S.-Japan alliance "is the cornerstone of Japan's diplomacy and security. Only when there is trust does an alliance come alive," Abe said in Tokyo before departing, according to Kyodo news agency.
And there's trade. The links are so tight between the United States and Japan that there are anomalies such as Toyota Motor (TM) being the largest maker of cars within the United States, as well as the largest in the world.
Markets reacted immediately to Trump's election. Most dramatically for Japan, it caused big swings in the strength of the Japanese yen. I'll get back to that later in this piece, and explain which stocks to watch.
One of Abe's aides said the prime minister would talk about the importance of the alliance for the two nations "but also for the entire Indo-Pacific region as well as world politics." Although Trump talked about getting Japan to pay more of the bill for the U.S. troops based in the country, his aides have told Abe's team that "we don't have to take each world that Mr. Trump said publicly literally."
Let's hope they do get to talk - confusingly, the Japanese contingent said on Wednesday that it didn't even know where or when the meeting will take place, according to Reuters.
In fact, they don't even know who is coming, or the right person to call to ask about those details. Other heads of state, presumably via an aide, have been cold-calling Trump Tower trying to reach Trump, The New York Times said.
His team retaliated on Wednesday, saying that he has spoken to 29 foreign leaders, so there. Cold calling works sometimes, as this reporter knows!
Somewhat bizarrely, the Egyptian President Abdel Fattah al-Sisi, a general who took power in a coup, got through to Trump first, ahead of any major head of state. Second, according to Australian media, was Prime Minister Malcolm Turnbull, who got Trump's private number from the Aussie golfer Greg Norman, a friend of Trump.
The State Department would normally arrange those basic details well ahead of such high-level talks. But the department says it has not been contacted by Trump's team, a sign of the difficulties ahead in converting a businessman who has never held office into a politician holding the highest position in the world.
The "flight to quality" saw the yen sink to ¥101 to the U.S. dollar the day after the election. Japanese investors run back to their domestic currency; the dollar took a hit due to the shock of the result but also due to the likely postponement of any interest-rate increase into next year.
The dollar has now rallied strongly, to its highest in 13 years against a basket of currencies used as a benchmark, and the balance has returned.
The cross rate has risen to ¥107 to the dollar, above its 200-day moving average for the first time since December 2015. The yen has weakened further since then and stands, as of the time of writing, at ¥109 to the greenback, its weakest level in almost six months.
It's not just the yen rate that's reacting. The drive comes from bets that Trump will bring in inflationary policies that will drive U.S. interest rates and the dollar higher in the long run.
The Chinese yuan has fallen for nine straight days, and is now at its weakest level in over eight years against the dollar. That's not going to make Trump happy -- he calls China a currency manipulator, for keeping its rate low to boost the competitiveness of Chinese products vs. U.S. ones. That might come up with Abe.
Most countries prefer stronger currencies in the long run -- a sign of a strong economy and significance as a currency of choice. Not Japan. The perception is that a weak yen promises a good economy, by boosting exporters such as Sony (SNE) , car-parts maker Denso (DNZOY) , camera expert Canon (CAJ) and Nippon Steel & Sumitomo Metal (NSSMY) with lower-cost products abroad.
Airlines, hotels and stores within Japan are also making sure their inventory is ready for the expected flood of tourists. Japan's biggest airline, ANA Holdings (ALNPY) , and the national flag carrier Japan Airlines (JAPSY) are both worth a watch. They also own a lot of hotels.
Otherwise, the big Japanese hotel chains like Prince Hotels, Nikko Hotels and Okura Hotels are all privately held. But Starwood Hotels & Resorts (HOT) , Hyatt Hotels (H) and budget operator Choice Hotels International (CHH) all have substantial operations in Japan and are expanding ahead of the 2020 Olympics.
Actually, that flood has already been occurring. In October, the number of tourist arrivals was up an impressive 17.7% year-on-year. Chinese visitors have become increasingly influential -- their numbers were up 14% in October, building on a huge surge in growth last year. Growth was hit in October by two typhoons that disrupted travel out of China the prior month.
Japan has another export that it's very keen to promote. Abe's administration successfully removed a long-standing ban on the pacifist country selling weapons internationally. Since then it tried, unsuccessfully, to sell 12 submarines to Australia. ShinMaywa Industries (T:7224) is still interested in selling US-2 seaplanes to India, but that has stalled. Japan's X-2 stealth fighter prototype may be hard to mass produce.
While Japan builds up its lackluster brand as a maker of entire war machines, it is selling components of weapons to the United States. That's a natural link given Japan's strength in electronics and specialty materials. But it would need to displace U.S. suppliers, in many cases, and would be a junior partner learning more from the U.S. client than it likely delivers.
Abe and Trump surely won't be that specific in what's really a "meet and greet" while Abe heads to a summit in Peru. But they will chat armies, for sure, and by extension arms.
Maybe most important, if the chat does happen, it will be an important first step for Trump into big-time diplomacy.