Despite ‘Promises’, Japanese Market Chaos Continues

Despite ‘Promises’, Japanese Market Chaos Continues (ZeroHedge, May 24, 2013):

UPDATE 1: Japanese stocks turned negative (NKY -600pts from highs, -1.5% on day; and TOPIX down over 4% from highs); Japanese banks -11% from yesterday highs; S&P futures down 10 points from after-hours highs…

UPDATE 2: *KURODA WANTS TO AVOID INCREASING VOLATILITY IN BOND MARKET (yeah thanks… as useful as saying “we all want to avoid syphilis”)

UPDATE 3: Nikkei 225 Drops below 14,000 – TOPIX down 11% from highs

For the second day in a row, and in spite of comments from Abe and Kuroda on communicating with the market (as Kuroda says BoJ Monetary easing sufficient), Japanese capital markets are out of control.

JPY, after weakening 150 pips from early this morning and breaking back over 102.50 has just given 100 pips back in matter of minutes and is now trading stronger vs the USD on the Japanese session. Japanese stocks have cliff-dived with the NKY dropping 400 points in minutes and TOPIX over 1.5%. JGB futures (prices not yields) have surged back higher to trade unchanged on the day as the correlation we noted earlier – and believe is now critical – has held between an out of control bond market and any further sustainable gains in stocks.

This is not good… as if the JPY carry trade implodes (driven quite simply by a total lack of reward-to-risk given the volatility in the carry currency and loan rates themselves) then what happens to all the levered longs in European peripheral bonds and any number of the ‘most-shorted’ companies in the US… It seems clear that this is all an experiment to see how markets react – the answer – not well!

1 thought on “Despite ‘Promises’, Japanese Market Chaos Continues”

  1. Japan is in deep trouble. Everything they export is radioactive, and a lot of their exports get returned for excessive radiation poisoning. Same with their once-invincible vehicles.
    They have managed for a while because they are a nation of savers, but the losses continue. Some of the big money houses in New York defaulted on Tokyo property because they also know what is going on. At the rate things are going, Japan will be unlivable before long.
    The poison from Fukushima continues unabated, and they have no technology to fix it. It is killing everything. Why they continue to pretend nothing is wrong is beyond me.
    Japan is a funeral waiting to happen.


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