You Are Here: Nikkei vs S&P 500

Short-term, it's still do or die time for the S&P 500 Index. It rebounded back above the trendline formed by the 2009 and 2018 lows. I view the March 2020 panic as an anomaly to some degree. All activity since 2009, aside from the panic, occurred between this support line and the taper line.

Long Japan, Short Yen Update

Back in March I posted: Trade of the Decade: Long Nikkei, Short Yen

I neglected to mention in that post that there is an ETF that does exactly this trade: DXJ. It made a new all-time high intraday today.

Shorter-term of years makes the Nikkei look like it will bounce versus the S&P 500 Index, note that currency depreciation massive enough to push the stock index higher would boost NK over ES. Longer-term, Japanese stocks looks like an abandoned asset class relative to the S&P 500 Index.

I'm only short the yen for now. DXJ is a decent vehicle becauase WisdomTree tilts the porfolio into export companies. It is at least a great starting point for people who want to maybe construct their own Japanese-stock portfolio. Speaking of myself, I seldom look at Japanese stocks and almost no one speaks of them outside of a few major exceptions that trade in overseas markets or are extremely high-profile companies.

Trade of the Decade: Long Nikkei, Short Yen

Long Nikkei, short yen. Not a go out tomorrow and buy trade because Nikkei will track south with global indexes. The yen leg of the trade also looks extended here. In 10 years time however, these will look like rounding errors if the trade works. This was a trade people thought about putting on a decade ago, but it's time may have finally arrived.

Will Japan wither away in the Age of Automation or be reborn as the export powerhouse>? It is one of the few nations that could credibly become the Global Hegemon if AI and robotics dominate warfare. China's 1 billion people is no advantage on 100 million Japanese, nor is 400 million Americans. All that matters is the technological edge. The transtion period will be expensive though. Japan is a commodity importer, it has a massive debt/GDP ratio and terrible demographics. Its exit from the malaise will hammer the currency.