Thanks Rohit- but it’s only just begun. NOW what.. if/when USDJPY levels off and starts to inch back upwards? Are these yenterventions only able to achieve -5 handles on USDJPY per clip? And if so- what’s that mean for the next one? 165 → 160? 170 → 165?
Because now we’re talking USDJPY 165 AFTER/AS A RESULT OF yentervention..
Fucking insane. This is why you never ever ever let the genie out in the first place
My only hope that I think about all day every day is that I am able to keep up and somehow stay a step ahead and inform you guys. This is just one instance- and I’ll tell you right now: there’s absolutely no way for me (or anyone) to have a 100 hit rate on these
Great post Weston. Skimmed it quickly, still relishing Yen Crushed Control, chuckling at the title. Dollar yen perilously close to 158. I did not see your note but will look there whenever I have Asia on my mind. Thx for great work
Thank you for your valuable work. How sustainable do you think it is in the long term for the Japanese economy and families to have the JPY at these levels? The fact that the Bank of Japan refuses to raise interest rates even in this situation makes me think that the Japanese institutions somehow find this situation acceptable. Is it possible that they are even willing to risk being crushed by hedge funds in a trade like Soros vs. the Bank of England? From the outside, it is really difficult to understand what the ultimate goal of the Japanese institutions is in maintaining this stance. Thanks for your reply
My answer (or response to you) is simply: I just really do not know how this plays out in the near term - let alone long term.
What I will say however are 2 things:
1. It’s dangerous to frame things as “sustainable/not” in terms of time frame, especially when it comes to the very unique economic policy dynamics of Japan. As you very rightly ask- the long run is a clear unavoidable path to unsustaiable. BUT, what Japan has thus far shown over decades is that “unsustainable” can be sustained, or staved off, for far longer than economic gravity would suggest. 250% debt/GDP has borrowing costs at less than a fifth that of the risk free United States? And (until fairly recently)- the safe haven asset from everything was USD, and the safe haven FROM USD was JPY? These things don’t make sense to begin with, but they were (are) realities for a very long time. What Japan is incredibly good at (maybe best in the world) is the ability to continuously kick the can down the road. To try and time/path out when/how that ends is something that has to simultaneously be at the forefront of our minds, and “ignored” - and both are needed to be done for the sake of our sanity, if not our portfolios.
2. You have to re-wire your mindset and approach from the “choices” that Japan is making at their preference in effort to obtain a “goal” - and rather, look at it as: Japan officials (collectively) weighing out what’s the LESS WORSE path among only terrible options- and that’s if they’re even lucky to have such a luxury. Often, these things don’t allow for the choosing of a less-worse path, and instead are forced into something. So, they aren’t “willing” to do any sort of Soros vs BOE any more than they are “willing” to turn the yen into the Argentine peso. These aren’t choices and preferences and planned pathways. This is, as I said, an act of how to free the foot to kick the can down the road- even if those kicks are just a string of taps for a few inches of breathing space at a time
Japanese workers got wage hikes this year which help but if the USDJPY keeps rising then the wage gains won't matter. JP Morgan estimates that USDJPY above 157 wipes out the wage gains.
Watching yentervention now as it is happening.
You nailed it. You said this week because its a holiday ✅
Yr range was USD/JPY 158-165. They started from 160 ✅ - Its at 155 now and still moving.
Well done!
Thanks Rohit- but it’s only just begun. NOW what.. if/when USDJPY levels off and starts to inch back upwards? Are these yenterventions only able to achieve -5 handles on USDJPY per clip? And if so- what’s that mean for the next one? 165 → 160? 170 → 165?
Because now we’re talking USDJPY 165 AFTER/AS A RESULT OF yentervention..
Fucking insane. This is why you never ever ever let the genie out in the first place
My only hope that I think about all day every day is that I am able to keep up and somehow stay a step ahead and inform you guys. This is just one instance- and I’ll tell you right now: there’s absolutely no way for me (or anyone) to have a 100 hit rate on these
Great post Weston. Skimmed it quickly, still relishing Yen Crushed Control, chuckling at the title. Dollar yen perilously close to 158. I did not see your note but will look there whenever I have Asia on my mind. Thx for great work
Weston dollar yen above 158, unbelievable.
155 → 158 → 160 → 155.
2 trading days.
Whats unbelievable is that what used to be unbelievable suddenly becomes the new normal reality within a trading day
Dear Weston,
Thank you for your valuable work. How sustainable do you think it is in the long term for the Japanese economy and families to have the JPY at these levels? The fact that the Bank of Japan refuses to raise interest rates even in this situation makes me think that the Japanese institutions somehow find this situation acceptable. Is it possible that they are even willing to risk being crushed by hedge funds in a trade like Soros vs. the Bank of England? From the outside, it is really difficult to understand what the ultimate goal of the Japanese institutions is in maintaining this stance. Thanks for your reply
Hey Marco,
That’s the big question..
My answer (or response to you) is simply: I just really do not know how this plays out in the near term - let alone long term.
What I will say however are 2 things:
1. It’s dangerous to frame things as “sustainable/not” in terms of time frame, especially when it comes to the very unique economic policy dynamics of Japan. As you very rightly ask- the long run is a clear unavoidable path to unsustaiable. BUT, what Japan has thus far shown over decades is that “unsustainable” can be sustained, or staved off, for far longer than economic gravity would suggest. 250% debt/GDP has borrowing costs at less than a fifth that of the risk free United States? And (until fairly recently)- the safe haven asset from everything was USD, and the safe haven FROM USD was JPY? These things don’t make sense to begin with, but they were (are) realities for a very long time. What Japan is incredibly good at (maybe best in the world) is the ability to continuously kick the can down the road. To try and time/path out when/how that ends is something that has to simultaneously be at the forefront of our minds, and “ignored” - and both are needed to be done for the sake of our sanity, if not our portfolios.
2. You have to re-wire your mindset and approach from the “choices” that Japan is making at their preference in effort to obtain a “goal” - and rather, look at it as: Japan officials (collectively) weighing out what’s the LESS WORSE path among only terrible options- and that’s if they’re even lucky to have such a luxury. Often, these things don’t allow for the choosing of a less-worse path, and instead are forced into something. So, they aren’t “willing” to do any sort of Soros vs BOE any more than they are “willing” to turn the yen into the Argentine peso. These aren’t choices and preferences and planned pathways. This is, as I said, an act of how to free the foot to kick the can down the road- even if those kicks are just a string of taps for a few inches of breathing space at a time
Japanese workers got wage hikes this year which help but if the USDJPY keeps rising then the wage gains won't matter. JP Morgan estimates that USDJPY above 157 wipes out the wage gains.