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Global Threat: Yen's Surge Is A Red Flag For World Markets

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According to Reuters agency, a gradual rise by the Japanese yen in recent weeks culminated in a dramatic overnight surge — firing a warning shot for world markets and the global economy in 2019. Historically, outsized yen gains in short periods, such as the Russian default in 1998 and the global market meltdown in 2008, are a harbinger of stress for global markets. Market watchers say the yen’s latest ascent is a sign that the global economy is set for a rocky ride ahead.
Signs are growing that the global economy is headed for a slowdown. In an environment like that, the yen tends to thrive. Japan’s large current account surplus means global markets consider it a safe haven. Global surveys this week showed activity in European and Chinese factories are slowing. And falling demand forced Apple (AAPL.O) to issue a rare cut in its sales forecast, sending tremors through global markets. The yen’s roaring higher was a sign of just how widespread concern over the health of the global economy had become, said Ulrich Leuchtmann, head of FX research at Commerzbank. Japanese investors tend to invest a large portion of their savings overseas, then bring the money home during extreme market stress, driving the yen higher.At session lows, the Japanese currency has gained more than 6.5 percent in the last five trading sessions and is the best performing major currency since early December. But even as evidence mounts that the global economy is struggling, central banks, led by the United States, are signalling more interest rate increases are coming. That is raising fears they may be tightening policy too much into an economic slowdown. “It tells you there is a lot of anxiety and nervousness and concern about a more material slowdown in the economy,” said Bob Michele, chief investment officer and head of fixed income at JP Morgan Asset Management.

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Good long term short setting up.....

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Friend of mine told me that price never went up in Japan for last 20 years. Example... A rice ball was 120 yen in 1995 and is same today. Goverment is losing trillions of yen from pension funds in order to maintain the stock market and popularity. Debt in Japan is held by the Japanese (bank of Japan, citizens...) It's not the case in USA or France. That makes a big difference.

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1 minute ago, damirUSBiH said:

....  Debt in Japan is held by the Japanese (bank of Japan, citizens...) It's not the case in USA or France. That makes a big difference.

Government debt per person.

1. Japan: $90,345

2. Ireland: $62,687

3. US: $61,539

4. Italy: $59,372

5. Belgium: $59,680

6. Austria: $49,975

7. France: $51,768

8. Greece: $49,630

9. UK: $52,816

10. Portugal: $44,819

(OECD)

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Interesting. I read that more than 90% of Japan Gov. debt (¥1830 trillion cca. $16.59 trill) is held domestically, largely by Japanese banks, both life and non-life insurance companies, the the Bank of Japan. The domestic market for Yen bonds is strong due to the Jap’s high savings rate & the safe-haven status of the Yen.... 

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I'm not an economist or academia but it seems in the past that gold was the economic yardstick for future forecasting ? As of late 1/5/19 gold is trending higher albeit the US politics with relative low inflation ? I don't know but I am continuing to watch the price of oil rise along with other commodities?   

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Where is this Thread Starter copied from ?

Seems , that Japan is able to pay off it's bonds , and able to find customers of it's newly issued bonds .

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On 1/4/2019 at 8:55 PM, damirUSBiH said:

Friend of mine told me that price never went up in Japan for last 20 years. Example... A rice ball was 120 yen in 1995 and is same today. Goverment is losing trillions of yen from pension funds in order to maintain the stock market and popularity. Debt in Japan is held by the Japanese (bank of Japan, citizens...) It's not the case in USA or France. That makes a big difference.

Japanese tourists used to be super rich in Australia whereas aussies are greater in real terms traveling there now. They're stealing from their own future with their stupid bank policies and negative interest rates. Economies need some inflation 1-3% or a downward spiral can occur if the usa doesn't run big deficits and hence private sector surplus of the reserve currency as a private sector surplus; the opposite of a deficit.

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On 1/4/2019 at 5:57 AM, rainman said:

 

Government debt per person.

1. Japan: $90,345

2. Ireland: $62,687

3. US: $61,539

4. Italy: $59,372

5. Belgium: $59,680

6. Austria: $49,975

7. France: $51,768

8. Greece: $49,630

9. UK: $52,816

10. Portugal: $44,819

(OECD)

Interesting. And Japan has a very low birth rate. There are very few working age people to support the aging population. 

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