The Japanese stock index, which today experienced the largest intraday drop in its history. (The Covid dump record was broken): 1. Most likely this is due to an increase in the rate from the previous 0% to 0.25%. 2. Until this moment, the Japanese could take out an interest-free loan in yen, exchange them for dollars and buy shares - a free carry trade + the opportunity to invest in the American market. 3. But since the Bank of Japan raised interest rates the day before, the US dollar fell against the yen. This meant that traders who had borrowed billions of yen to buy dollars could no longer cover their debt. 4. What did they do? Sold the shares they bought earlier with those dollars = stock market crash. 5. According to various estimates, the Japanese own shares of US companies worth ~$5 trillion. All this is essentially a “black swan” on the part of the Japanese regulator, which means that in any other case this situation in the markets would not have happened.
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Has the bottom in alta already been reached, or will we fall even further?
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gm
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