Hedge Fund managers leverage this to buy US equities.
When the Yen rises, margin calls force managers to sell stocks.
All US Indices are near all time highs.
Sounds like a perfect storm for a major correction this week.
Stay tuned for updates.
Nikkei opens at 3-week low as yen rises
Asian equity markets declined across the board on Monday with Japanese stocks falling to a new three-week low on the back of a stronger currency while renewed fears of an economic slowdown in China hindered gains.
Japan’s Nikkei index opened below the key 14,000 level, Australia’s S&P ASX 200 index hovered around 5,040 points and South Korean shares lost 0.2 percent.
http://www.cnbc.com/id/100919658
Nikkei Drops 1000 Points In 3 Days; JPY Strongest In A Month
Something is rotten in the state of Abenomics. The last three days have seen the biggest surge in JPY in over six weeks (now well under 98 and at its strongest again the USD in over a month) and the biggest drop in the Nikkei 225 in almost two months. It seems with Fed Taper talk off the table (in investors’ minds), hotter than expected inflation in Japan (what they wanted but brings the ‘endgame’ closer for expectations of moar QQE), and a miss for retail sales in Japan tonight (no matter what they do, consumption disappoints – unsurprising given the demographic hurdle, even with free money oozing out of every crack) that global investors (who have once again piled lemming-like back into the long-Nikkei-short-JPY trades) have found better places (for now) to put their ‘easily-earned’ money. Or is this the Japanese markets’ cry for help ahead of Kuroda’s speech this evening?
http://www.zerohedge.com/news/2013-07-28/nikkei-drops-1000-points-3-days-jpy-strongest-month
Fed, GDP & jobs — get ready for a busy week in the market
For the dead of summer, the week ahead couldn’t be livelier.
“Taper talk” should pick up again as the Federal Reserve gets set to meet Tuesday and Wednesday. While Fed officials are not expected to make any major changes in their statement or policy, traders will be watching for any subtle tweak that could indicate the Fed’s views on tapering its $85 billion a month bond-buying program.
http://www.cnbc.com/id/100917867
Japan: From Quagmire To Abenomics To Collapse
Part I: Toward the abyss
Japan has been in a stable, but unsustainable, equilibrium for years. Its leaders know it is unsustainable and in their immense wisdom, decided to manage the whole system in order to achieve a sustainable development. However, this will prove fraught with danger since moving an unsustainable system away from its steady-state runs the risk of unleashing a gale wave of unintended consequences. The problem of course is that the people now in charge of moving the Japanese system from its current constellation have absolutely no idea on how to get it from where it is back on sound footing. The reason is simple, as with most policy quacks they are taught by other quacks. Some of the teachers even have Ph.D.’s. in quackery to prove to lesser quacks who truly master the art of quacking; we call them economists.
http://www.zerohedge.com/contributed/2013-07-28/japan-quagmire-abenomics-collapse
Credit squeeze in Asia now worst since financial crisis
http://www.cnbc.com/id/100919813
Nikkei currently down 3.3%
http://data.cnbc.com/quotes/.N225-JP
Goldman’s Blankfein: The Worst Case Scenario ‘Absolutely Will Happen’
Investors should always prepare for the most extreme risk scenario because it will happen, Goldman Sachs CEO Lloyd Blankfein told the Australian Institute of Company Directors at a breakfast briefing on Friday.
Blankfein, who’s been Goldman CEO since 2006, steered it through the fallout of the global financial crisis of 2007-2008. He said the experience had taught him to accept that the worst thing you can imagine will inevitably happen.
“Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen,” said Blankfein.
“The definition of infinity is that you wait long enough, everything happens.”
http://www.trunews.com/goldmans-blankfein-the-worst-case-scenario-absolutely-will-happen/
RT @martinpetherick: Nikkei looks like FTSE/S&P October 1987 just heading into the big crash. Uncanny similarity
https://twitter.com/finansakrobat
Alert – Possible Black Swan at the Top – Yen Carry Trade – See chart for effect
http://img837.imageshack.us/img837/4115/73qn.png
Effect of the Yen on the SPX – minute chart shows all the control of the Yen Carry trade
http://stockcharts.com/public/3421479/chartbook/308116905
It’s all about the Yen or Yen carry – There will be huge selling of equities with that trade.
BIG MOVE ALERT Monday – NAMO and NYMO – turning over – Moving average clusters – go with Momentum
https://twitter.com/ThinkTankCharts
SPX visual trading – turning over
http://img690.imageshack.us/img690/3896/lnt.png
Bearish Butterfly – Banks
http://img90.imageshack.us/img90/3108/lbhq.png
Opportunity to Short Japan again at hand?….Video with Dr Phil Pearlman
Asian Markets Could Be Sending Warning Signals
DB
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