Japan crossed the Diaper Ratio. Now, more than half of all diapers sold are for adults rather than children: http://finance.yahoo.com/news/japans-policy-warning-signal-west-124458587.html
The main reason I've been holding back on shorting the JPY (versus USD) is that the 10 year JGB yield has been stuck in a multi-year downtrend: http://www.bloomberg.com/quote/GJGB10:IND/chart/ However as this image http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/12/Japan 10s30s.jpg http://www.zerohedge.com/news/2012-...ns-japanese-pm-following-crushing-ldp-victory from Zero Hedge (via Tim Backshall https://twitter.com/credittrader) shows, the Japanese 10-30 year spread has been widening by far more than its US counterpart since the start of June. Therefore, the chart of the 30 year JGB yield, http://www.bloomberg.com/quote/GJGB30:IND/chart/ shows a much different picture to that of the 10-year, with yields now near a 52-week high of roughly 2.00%, a level not seen since November 2011. USD/JPY is much closer to a 52-week high rather than a 52-week low, despite the ongoing decline in 10-year JGB yields. Conclusion: If you're looking for a bond market indicator to confirm a possible Japanese downward spiral - look to the 30 year JGB first before looking at the 10 year. Bloomberg page showing table of JGB yields: http://www.bloomberg.com/markets/rates-bonds/government-bonds/japan www.bloomberg.com/news/2012-12-14/w...-since-94-poised-for-return-japan-credit.html "Longer-term bonds are signaling concern about Japanââ¬â¢s fiscal health. The yield premium on 20-year JGBs over 10-year securities climbed to 99 basis points on Dec. 5, the highest since 1999. "
Update on the JPY following the sun rising in Asia on Monday: http://www.zerohedge.com/news/2012-...rates-arrival-abenomics-20-opens-20-month-low Also a chart I was interested in, the correlation (or lack thereof) of USD/JPY and the JGB 10s30s spread: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12/20121216_JPY1_0.png This chart goes back to 2003, and there was a strong positive correlation between the two from 2003 to 2008. The correlation broke down then, but it may be returning. Also a chart of the JGB 10s30s spread going back to 2000. Just as the 10s20s is at levels not seen since 1999, it seems that the same is true for the 10s30s curve. http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12/20121216_JGB_1_0.png
Another Mish article about the Japan story. His slightly different emphasis is on the Japanese current account deficit. Also this article includes a link to "UVIC 2012: A Conversation with Kyle Bass" http://www.youtube.com/watch?v=t7Si3XTl6zQ Published on Nov 20, 2012 Kyle Bass converses with Darden Professor Ken Eades at the Darden School of Business University Investing Conference 2012.
Joe Weisenthal has been quite critical of Kyle Bass' Japan thesis. via http://www.businessinsider.com/blackboard/kyle-bass and http://www.businessinsider.com/category/kyle-bass?start=10 I found a collection of recent BI articles that criticise Bass' thoughts on the country's debt problem. March 27, 2012 Joe Weisenthal http://www.businessinsider.com/rich...me-bad-news-for-hedge-funder-kyle-bass-2012-3 May 20, 2012 Joe Weisenthal http://www.businessinsider.com/japan-is-never-going-to-default-2012-5 August 17, 2012 Joe Weisenthal http://www.businessinsider.com/shogo-fujita-on-jgb-2012-8 October 4, 2012 Joe Weisenthal http://www.businessinsider.com/nomura-on-shorting-japanese-government-bonds-2012-10 November 17, 2012 Joe Weisenthal http://www.businessinsider.com/kyle-bass-on-sovereign-currencies-and-national-debt-2012-11 (somewhat more balanced article, however there is a "appeal to authority" argument of Krugman's mentioned).
One interview with Kyle Bass (1 October 2012) http://www.youtube.com/watch?v=JUc8-GUC1hY Summary of interview provided here: http://www.zerohedge.com/news/2012-12-19/hour-company-kyle-bass "This year, Bass was the keynote speaker and in the following speech (followed by Q&A), the fund manager provides 60 minutes of eloquence on the end of the grand experiment and its consequences. From Money Printing and Central Bank Balance sheets to Japan and the psychology of the current situation - which in many cases trumps the quantitative data - the question remains, "when will this unravel" as opposed to "if?"; Bass provides his fact-based heresy against the orthodoxy of economic thought "On The Financial Nature Of Things" extending well beyond his recent note." **** Some notes: Not just talking about Japan. More of a broad overview of debt problems, without referring too much to specific countries. * In last 10 years, total credit market debt risen 10% per year, but population rise only 1% to 2% per year and GDP grow only 4% per year. * Problems known (quant analysis), so it's just a case of when/how they manifest (qualitative analysis) * Unusual is that the build up of debt has been in peacetime, not during time of war (eg. WW2).
I have not read or scanned all the posts on this thread, and I apologize if mine overlaps. The above is part of a quote from 20 posts ago. I have read Mauldin for 5 years and his END GAME book last year when it was published. I read a couple of his newsletters every week for 5 years. Let's be clear...that post (the quote above) is not Mauldin's, except he is the originator of "Japan is a bug looking for a windshield." The rest is lifted from Mish's essay at the stated post. Not terribly relevant here except it started me in Spain where Japan is about now: I toured Spain for a month in April 2009 talking to educated Spaniards before the PIIGS acronym and read a wonderful Spanish economist then who said there would be no Spain in 3 years (economically). The only relevance to this Japan thread is I had the PIIGS concept down real good then without the acronym, and my notion of the over-leverage of the Mediterranean countries and their imminent, unimaginable fate was a frightening looking glass into America's future, but Japan was sure to succumb soon. When I coupled this with my hero David Walker since 2007 (please Wikipedia him if not familiar) I knew damn well Japan was doomed and America would not be far behind with socialist Obama similar to socialist Spanish leader Zapatero. I mellowed out some, coming to believe USA may not be hitting a brick wall but experiencing dramatically declining quality of life. (I reserve judgment on hitting a brick wall, though.) Just as the Mediterranean was a looking glass for me 3 1/2 years ago, Japan is too, but Japanese debt as described in this thread is worse. Japan's uniqueness is it doesn't owe its soul to the country store--foreigners-- because its debt is held mainly by its citizens' purchase of its bonds. Citizens can be more graceful about demanding higher coupon rates from bonds issued by its government even as foreigners WILL demand it due to increasing risk of not being paid back. Mauldin has been saying for a while that Japan's day of reckoning will start in 2013 and hit bad by 2014. (I have heard/seen arguments that it will be later.) You can listen to his 20 minute interview that includes reference to Japan. The link takes you to the page, and the interview is one of many links about half way down. France (hmmm....another socialist at the helm) Mauldin says is a year or two after Japan's reckoning (suggested in END GAME) and he stands by it in the interview. http://www.georgejarkesy.com/category/radio-segments/page/3/ He says bad pain will occur to the Japanese then to the French, then to U.S. The old mantra "it is better to pay now than later" when in the middle of a reckoning will become obvious. We look at Europe, then Japan as if we will be looking at OUR life's story flash before us, but our FUTURE life's story, not our past. Mauldin recently interviewed a well respected Japanese investor who is a very big bear on Japanese bonds and currency he makes reference at the link I posted. Interesting view. btw...Mauldin interviewed the respective chief-of-staffs for Harry Reid and John Beiner on the fiscal cliff. Behind all the puffery of Reid and Obama and Beiner, the real work goes on by the office staffers who bring the sides closer. These gentlemen get it. They have known for a long time fiscal cliff is coming. They know everything I posted here for a long time. Buckle up if you listen to the interview. http://www.mauldineconomics.com/landing/chiefs-of-staff-video/MEC011TF1112D Sorry for this long post. It is some of my primal scream.
I'm pretty new to forex trading. I just dropped the yen altogether because I don't really understand the fundamentals. I keep hearing, long gold/short yen is a sure thing and no matter how bad the fed is, long usd/jpy is the only way to go I don't get it. When they are not reparing tsunami damage, all they do is export. Isn't a weak yen good for their business?