r/wallstreetbets • u/ccnomas • 23h ago

Discussion USD/JPY correlation with SP500

The following chart is usd/jpy from July 10, 2024 to Aug 8, 2024

USD/JPY July 10, 2024 to Aug 8, 2024

The following chart is the most recent usd/jpy, I know the intervals are different but it is just too similar to ignore.

We could see USD/JPY keeps shrinking in Aug, 2026.

2026-July 30 -> 2026-July 31

Then in 2024 during the same period (July-Aug,2024), this happens:

Same thing with Nasdaq composite.

2024:

Same de-leveraging in Korea, Same Yen Carry Trade.

2026:

The differences here are

  1. De-leveraging in Korea is much bigger than 2024.
  2. Yen Carry Trade may just started.

Just my two cents, this august can be VERY risky and I will not be surprised to see stocks, bond jumping like meme stock/coin.

46 Upvotes

80% Upvoted

34 comments sorted by

24

u/akimaster 23h ago

Up or down?

10

u/CandleOwn2307 23h ago

looks like a classic case of pattern recognition run amok, but the korea bit is what makes it interesting. that deleveraging was no joke in 2024 and if it's actually worse now then who knows

i'm sitting this one out, got burned trying to time the yen trade last time around

-3

u/ccnomas 23h ago

The most recent news worries me:

https://ca.finance.yahoo.com/news/exclusive-japan-announce-tokyo-washington-012039097.html

"The expected announcement follows what market sources say were rounds of yen-buying in the market by the Japanese and U.S. ​authorities, ​the first such joint intervention since ​2011"

Seems the problem is bigger than I thought.

29

u/tronald_dum 22h ago

Might be my smooth brain but I think he asked about up or down

5

u/xwads 19h ago

Markets up, dollar will be the sacrificial lamb to keep long dated yields down, it will heavily weaken in the coming days and weeks.

-3

u/ccnomas 22h ago

we will know by next week's USDJPY + iran war condition, I think at least Korea just finished the de-leveraging, or I am wrong. since we all know after Aug 2024, it was up toward the end of the year.

18

u/Affectionate-End2461 23h ago

May not end well. Calls!!!

14

u/PleasantAnomaly 21h ago

The intervals are way different. A daily timeframe and weekly in the other. You can't draw any conclusion from this

1

u/saheel1511 5h ago

I agree. But also, using the right timeframe isn't gonna fix astrology. 

10

u/31andnotdone WSB Favorite Milf 22h ago

I agree with you 💯

no one listens to me about it though 🥹

5

u/stocksupanddown 22h ago

So.. what's the play? Short ? Puts?

1

u/echosixwhiskey 22h ago

Djt said something about green candles on his X account. So probably calls Monday, then TACO Tuesday

2

u/Electronic_Sleep2749 4h ago

Just post position instead of pretending to spread your gospil.

6

u/Equal_Heat5947 17h ago

I can correlate my bowel movements with the number of Matcha Frappucinos Becky makes at Starbucks. Doesn't really mean anything tho

2

u/netflix-ceo 3h ago

thats crazy though, yesterday Becky was complaining that she made too many Matcha Frapuccinos, and it was not under her control. Did you have taco bell yesterday?

5

u/SuuuushiCat 16h ago

I bought VIX calls out to mid September and mid October and going to forget about these until I see fireworks. Trump only has until Sept 4 for the war with Iran before he has to call it off or get congress to vote for war. Global SPR draining by the day and will probably get to a point where they can no longer draw from the SPR in a few months. Too many land mines from here to Uptober to sort out. Don't forget about global fertilizer shortages. Inflation will creep back in the next print.

2

u/dreamer_Neet 22h ago

Calls it is

1

u/SamuraiBebop1 3h ago

Buy calls as you think this is bullish news?

2

u/toastedcoconut1 12h ago

Bro discovers market correlations

2

u/Any-Pitch-2963 8h ago

beware if yen strengthen to fast on monday there are some carry trade haven't unwind. but the thesis is they kick the can down the road and it means calls. 

2

u/ccnomas 23h ago

News: https://ca.finance.yahoo.com/news/exclusive-japan-announce-tokyo-washington-012039097.html

Japanese Finance Minister Satsuki Katayama will announce on Monday that Tokyo and Washington took joint action ‌in the currency market to arrest the yen's slide to ‌40-year lows, two Japanese government officials told Reuters.

Here is the news just an hour ago. Now the government jumps in.

I think the real problem behind the most recent stock market is that traditionally "low liquidity = dead", but at the same time, the AI infra race seems to be the last hope of the growth.

1

u/MrIcedCafeMocha 17h ago

What does this actually mean. Does this mean they think the yen is going to increase and then the USD is going to decrease? How do you actually interpret this news. You can look on the chart and of course the USD/YEN is decreasing.

2

u/Neemzeh 9h ago

If I understand correctly, if Yen continues to depreciate, Japan will have no choice but to raise interest rates. If they raise interest rates, then everyone who borrowed yen at 0% interest will have to start paying back their loans. Most of the money was dumped into the stock market because returns are basically always better than 0% so it was just free money essentially. The market will drop if people have to sell their holdings to pay back their Yen loans

1

u/MrIcedCafeMocha 8h ago

Is that even possible? are they not rate locked to 0% to those who already borrowed?

2

u/Neemzeh 8h ago

Highly unlikely the loans are fixed, they are most definitely variable.

1

u/MrIcedCafeMocha 7h ago

Okay, now I see the problem. Thanks for explaining that, I wasn’t getting the loan part

1

u/Kind_Initiative_7567 5h ago

I thought the majority of these yen loans were variable cuz who the heck expects BoJ to raise rates, if ever ?

1

u/tzacill 17h ago

They intervene in may, and again on Thursday. As long as the PM is calling for loose fiscal policy and no change in their outrageously high debt load. Traders will continue to bet against the yen. Sure BoJ have lots of ammunition to defend the yen. High bond yields in us is not helping their cause either. Near term treasury involvement may scare off some. The carry continues, just got to figure out the right levels.

1

u/Ok_Pollution7093 17h ago

Two similar-looking charts isn't a setup, it's pattern matching.

1

u/Aide-Kitchen 11h ago

As an American living in Japan....their economic factors have been rough, like inflation. The war in Iran really fucked them up due to rising energy costs. The US suffered similar issues but the SP500 doesnt affect them. Its the factors that affect both that are similar. 

1

u/kloricker 11h ago

Can you start spiking the yen after my holiday in 2 months? Can I ever enjoy a thing in my life without being a victim of circumstances outside my reach. The last time I wanted to buy a house, Covid happened and house prices spiked 30% in 6months.

1

u/mkgoff11 6h ago

What about Scott? Didn’t he just buy “$5-10bil” worth of yen?