The Nikkei closed the morning session up 9.4 percent. Expect a retest of the lows because the Bank of Japan has signaled it serious about strengthening the Yen.
The Easy Money Reckoning Arrives
The Wall Street Journal reports The Easy Money Reckoning Arrives
The selloff in global stocks that began Friday and continued on Monday is in part a correction from sky-high values, especially in tech shares. But it may also be the start of a reckoning for a decade and a half of excessive spending and easy money that is going to arrive eventually. How soon and rough the reckoning will be is the great unknown.
The selloff has hit hardest in Japan, with the Nikkei index down 12.4% on Monday, its worst day since Black Monday in October 1987. This extends Friday’s 5.8% drop, and other Asian markets fell too. European and U.S. shares also tumbled, the Nasdaq by 3.4%.
The Japanese plunge is a direct result of a long-needed shift in monetary policy and exchange rates. The Bank of Japan raised its interest-rate target (to 0.25%) last week and laid out a timetable for tapering its quantitative-easing program. BOJ Governor Kazuo Ueda said these moves are intended in part to arrest the falling yen, an unusually explicit statement about exchange rates for a central banker.
These moves have triggered a predictable and necessary repricing of risk in Japan following an extended period of extraordinarily loose money. The yen’s dramatic depreciation throughout this year arose from the yawning gap between relatively high U.S. interest rates and abnormally low Japanese rates. That gap is now narrowing as the BOJ normalizes policy and the Fed prepares for rate cuts.
A weaker yen enticed foreign investors into Japanese stocks that appeared cheaper in the investors’ home currencies. As of March, foreign holders owned about one-third of Japanese equities by value according to economist Jesper Koll. Yen depreciation also boosted the expected yen-denominated profits of Japanese companies.
Mr. Ueda has made clear that these times are over. It’s no coincidence that while Japan’s stock market in recent days has lost all of its gains since January, Japan’s currency has gained back all of its losses from the same span.
US equities
I won’t be here for the open, but as of Midnight Mountain Time, futures suggest the Dow had recovered about 40 percent of its losses and the S&P 500 about half of them.
I highly doubt this selloff is over except perhaps for the short term. Watch out below if volatility subsides without much of a bounce.
This is a very expensive market.
The “Magnificent 7” Stocks
On August 4, I asked Are the “Magnificent 7” Stocks Today’s Version of the “Nifty Fifty”?
Basically yes.
All of the above magnificent seven are excellent companies. But what price are you willing to pay for them?
Good luck with the Magnificent 7 if you are in that trade. You will need it.
Nothing is forever.
Global Black Monday 12 August 2025
Is the asset debt macroeconomic system a simple self ordering mathematical and deterministic system? At the minimum this is an interesting, observable, and testable hypothesis. (Kindly visit the economic fractalist)
12 August 2025 will complete an incipient 25 July 2024 6/13/13 day three-phase decay fractal series containing the 16 July 2024 peak valuation day :: y/2-2.5y/2-2.5y, analogous to 1929’s incipient 11/26/27 day :: y/2-2.5y/2-2.5y three-phase decay fractal series also containing the peak valuation day.
The 1982 to 2025 13/32 year :: x/2.5x first and second fractal series is a fractal replay of 1807 to 1932 36/90 year :: x/2.5x fractal series and an interpolated large scale fractal series within the larger 1807 36/90/90/54 year :: x/2.5x/2.5x/1.5x series ending in 2074.
12 August 2025 will complete an incipient (1 vice 25) July 2024 6/13/13 day three-phase …
12 August 2024 vice 2025 …
been trading FX for decades. there are lots of carry trades out there. just not the volume for the big boys like MBS and money center banks to participate in size…………but for little pikers like me just swinging my own little bat, plenty of size and juice.
Markets don’t move in straight lines, this chapter in the story has only just begun.
It’s buy and hold for us non corrupt investors.
Without a nuclear arsenal, the Bank of Japan owns at least a plurality of its national debt which is about 260 percent of ts GDP. At the extremes the Japanese central bank must defend its currency to maintain Japan’s export/import relative neutrality, otherwise import cost in a disproportionally cheapened Yen would disrupt the balance. The US Fed with its nuclear backing and the dollar still held as the world reserve currency, owned by so many to such a great degree and in so many countries, has quite a bit of wiggle room after a 2024-2025 recession and equity collapse and in spite off its trade imbalance.
For consideration.
Do global composite equities self organize into ideal elegantly simple maximum valuation growth patterns and thereafter self assemble in pathways of optimal decay under the qualitative umbrella of (now post 2009 extreme) QE and QT? Both the Nikkei and the ASWI are following 1 July 6/13/13 day :: ideal decay pathways containing the ASWI peak 16 July 2024 end of trading day peak valuation day. The last 13 day grouping(fractal series) started on 25 July and is composed of a 4/10 grouping with the final 10 days composed of a 2/4/4/3 day fractal decay series. This Monday with its 12% loss was Black Monday day one for the Nikkei and day 4 of the second 4 day fractal.(2/4/4/3). Thursday is day 4 of the the 4 day third fractal(2/4/4 /3). Monday of next week is day 3 of the 2/4/4/3 day series and, if the valuation decay model is true, represents a 1987-like crash and Black Monday day two.
Interestingly, the rate of pay that Japanese porn queens get keeps falling, and more extreme content becomes the norm. This is a barometer for the state of Japan’s society and economy, where whoring is normalised and industriallsed.
The reason young women do this is because of the lifestyle it offers, which revolves around cm female-orientated consumerism: clothes, makeup, holidays, advertising that you’re living the dream on social media… A distraction from the tedium and chronic stress of the Japanese economy and “normal” office-based careers filled with long hours and complex office politics.
The sheer scale of the Japanese porn industry contributes to social isolation, falling marriage, and rising childlessness, which all has a long-term demographic impact on their economy.
As their economy continues to deteriorate, so too will these other “societal norms” of different forms of quasi-prostitution, including “de-ai”, BJ bars, “hostessing” and escorting.
i was thinking exactly the same thing. so obvious really. i do believe in fractals. hat tip taleb and mendelbrodt
Josh Shapiro stays where he belongs. Kamala Harris VP Warren Buffett Jr Buy & Hold George Floyd.
They should rename him “Pink Floyd” and claim him as trans too…. “Teacher, leave them kids alone…”
The Nikk (c): 34,675.39. If the Nikk fills the two gaps above it might pop above Dec 1989 high. The Nikk is either in distribution or in re-accumulation. Make your bets.
My bet is that you know sweet FA about trading.
For dtj: sold FANG for a 5% gain. Just so you can keep track.
The “Falling Knife Index” basket of stocks doesn’t change. You can track it here: https://docs.google.com/spreadsheets/d/1mm1Y-iOfqC5bE9tLP5Sw_pywmC9yZW7ceT_qfxGi5MM/edit?usp=sharing
Thanks. These are the prices I paid yesterday morning: CNQ $32.42, CVE $17.22, SU $35.40, VRN $6.45, FANG $182.12, CHRD $148.03, TRMLF $40.59. Though I have already sold CVE, SU, VRN, and FANG for gains of 3%, 3%, 5% and 5%.
I notice you never mention any losses. Gamblers usually don’t.
I listed 7 stocks that I bought yesterday morning. If they all dropped in value, you would be able to see it. Hard to be more transparent than that.
exactly correct insight. i have been a lifelong trader and gambler for my gruel. i always tell my close pals my worst days in the markets past year and past 30 years…….this year i lost 700,000 USD in one day for instance. i had one day where i bought a new beach front multi family property almost 30 years ago that became worthless in one day………..a sink hole………oh the memories
Sold CHRD for 4% gain
Suncor quarterly results:
– EPS $1.22 vs $1.08 estimate
– aff $3.4B
– fff $1.35B
– cf $3.83B
– net debt ⬇️to $9.05B from $9.55B
– repurchased $825M of its shares
– upstream prod 771k bpd
– refinery throughput 431k bpd
Solid results.
show me a man that cares about another man’s purse, and i show you a damn fool. does anyone give a hoot how many shekels musk or mbs or buffet have?
“…the Easy Money Trade is Over”
The easy money trade was the insider selling. They hit the exit first, while the getting is best. The home builder CEO’s made HUGE piles of cash for themselves, selling into the home builder stock peak in 2005. Buffett announced his exit from BofA and Apple, perfectly.
Just like Joe Biden the market is strong and resilient. Until it’s not.
Now it’s the Kamalamity market, cue ridiculous cackling laughter for no reason.
perfect. how did Biden career end…….slow at first,then all of a sudden. et tu obama
“WSJ Reports: The selloff in global stocks that began Friday and continued on Monday is in part a correction from sky-high values, especially in tech shares. But it may also be the start of a reckoning for a decade and a half of excessive spending and easy money that is going to arrive eventually. How soon and rough the reckoning will be is the great unknown.”
The selloff in (All) global stocks that began Friday and continued on Monday (plays a very small part) is in part a correction from sky-high values, especially in (Most All) tech shares. But it (Is) may also be the start of a reckoning for (well over) a decade and a half of excessive spending and easy money (for most anybody working/investing 401K/CD’s) that (Has) is going to arrive eventually. How soon and rough the reckoning will be is (What we clearly know from past experience) the great unknown.
(Foreclosed Homes ex. ARM’s, Lost Job, Inflation, CC Debt)
(Loss of Jobs, and a lot of higher paying ones this time around)
(Repossessed Automobiles) ((see above))
(Rise in Divorces, Family breakups, and a semi family unit collapse of sorts)
(Restaurants, Gyms, Dentist, Eye Doctors, Travel, Hair Stylists, Retail Sales, and more will be closing/lessening in droves)
Etc. Nothing New, just Current…