GregTheAnalyst
Independent Investor, Macro/Micro & Technical Analysis
Japanese equities face an eventual collapse as decades of QE and similar tools, which masked demographic-driven productivity decline, come due through currency and bond collapses, with Japan first because it used them first. Per @puckrin, the yen is at its weakest since 2024 even after a hike to 1%, the highest since 1995, as carry trades into US assets persist despite $73bn of intervention. A faster drop in Japanese government bond values should cap the Nikkei. x.com x.comÂ
Japanese stocks face more selling if the Bank of Japan steps in to support the yen, because a stronger yen hurts the country's exporters. Topix fell 1.3% today on those worries. The last time this happened, Korea's KOSPI hit its eighth circuit breaker of 2026 and the Nikkei lost over 2,600 points. The yen is the key thing to watch. x.comÂ
Japanese equities are under attack from every direction after Japan and the US intervened to rescue the yen from a 40-year low. A stronger yen crushes export giants' overseas profits, while surging bond yields raise borrowing costs, the AI trade that drove the Nikkei to records unwinds, and fears grow over Japan's debt pile. The Nikkei has fallen about 16% in a month; the currency rescue may have broken the stock market. x.comÂ
Japanese equities should surge as a deliberately weakening yen pushes capital out of government bonds into stocks, a view shared with Hugh Hendry, who sees USD/JPY at 200 then 300 and the Nikkei at 160,000. Per Hendry, the Bank of Japan wants the yen to collapse to force money from JGBs into equities after 26 years without real wage growth, and offshore demands for dollar collateral drive yen selling. A yen at 250+ would also make Japan cheaper than China, which it already beats on quality. … Show more
Japanese small caps remain a strong short because TOPIX is removing almost all of them, leaving no passive investor on the other side; M&A is a short seller's only real fear. Quants shorting stocks at 2x EV/EBITDA and 0.3x book are winning. More pain is likely for deep-value holders while they wait for companies to delist at higher prices. x.com x.comÂ
Japanese and South Korean stocks sit directly on top of the crowded AI trade, which is unwinding as global bond yields head toward multi-decade highs and oil tops $90. That mix of higher inflation and borrowing costs undercuts valuations of the most expensive growth stocks. Japan's Nikkei fell 3.2% and Korea's KOSPI more than 6%, triggering trading curbs, as Samsung, SK hynix, Kioxia and SoftBank fell 8-13%. If oil and yields stay high, Asia may be where the pressure breaks through first. x.comÂ
Japanese equities are where liquidity has to go because the Bank of Japan cannot tighten without blowing up Japanese government bonds. @Globalflows notes the Nikkei just made an all-time high and frames it as the credit cycle at work. x.comÂ
Rising Japanese bond yields threaten expensive US tech stocks by pulling Japanese capital home. With yields near 30-year highs, Japanese investors can earn attractive returns domestically, giving them reason to shift some of the $2.9 trillion Japan holds in US securities. Weaker Treasury demand would raise US yields and crush expensive tech through higher discount rates, and even a small shift could create enormous pressure. The IMF has warned Japanese bond repricing could spill over globally. … Show more
Emerging markets look good for a short-term long because the US dollar is unlikely to break out without a catalyst. In-line PCE pulled down 2-year and 10-year Treasury yields, and the dollar index sits at a major resistance level, the May 2025 high. USDJPY is at 162, a critical level for the Bank of Japan to defend, and currencies move much more slowly than bonds. x.comÂ
The yen's intervention-driven rally looks weak and likely to fade, with USD/JPY possibly back near 160 soon. The Fed's EUR/JPY sale came after 4pm on a dead July Friday, signaling weakness speculators will test. Japan is slow-walking supporting policy such as rate hikes or repatriation incentives, and Bessent wants a lower USD/JPY without the US asset drawdown repatriation brings. If USD/JPY fails to regain 160 soon, though, the yen could rally hard, with spec shorts at record extremes. x.com … Show more
The yen could see a violent short squeeze, as Treasury Secretary Scott Bessent claims asymmetric insight into Japan's next policy move and openly dared traders to short it, saying "I am the house now." If Japan tightens or intervenes again, unwinding the huge leveraged yen carry trade could force liquidations across stocks and crypto. @QmoCrypto notes Japan has sold about $71 billion of Treasuries while defending the yen. x.comÂ
