2022-03-17

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.

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