Encarry Trade
Recent global stock market adjustments are mainly reported in the recession, the Trump shooting, and the uncertified crisis in the Middle East, and I think it’s a little different, especially in relation to the U.S. recession. It’s a long story without an answer. Apart from that, it’s a long story. Also, the logic behind the rise of the Nasdaq even when geopolitical issues arise in the past also worked, saying, “In the event of a war, funds flee to the safest place, and the U.S. stock market fits this.” Although all kinds of bad news are being reflected, the main culprit that has been personally focused on is Encaritrade. The manuscript submitted to Hankyung Market Pro a week ago was uploaded to the previous day and posted a link in the comments.
Trump’s tax cut policy is certainly a boon for big tech companies that are making a lot of profits. They are also the companies that can withstand a recession best. However, the most plausible interpretation is that the stock price declines at this rate in a short period of time, and someone throws it out to pay off their debt. What is the reason if someone suddenly throws a new apartment in Banpo? Because of a decrease in income? Because you’re afraid of war? Other than the liquidity situation in which you have to pay something back in a hurry, throwing out the best assets seems to be a dead end for another reason.
There have been concerns about the normalization of the Japanese currency since the beginning of the year, but the yen weakened from 140 yen to 160 yen per dollar, saying, “The interest rate hike went beyond the scope as problems in growth and consumption were revealed.” Zero interest rates and foreign exchange gains… The money released in that way was used for institutions’ debt-to-leverage and long-short strategies.
Gaslighting Should Lower Interest Rates If Bad
Everyone is used to gaslighting, “Even if the economy is a little bad, interest rates have to be cut, and interest rate hikes are a way to ruin everything.” Needless to say, how can the Japanese government raise interest rates when it has so much debt.
Although KEPCO’s borrowing has increased by more than 50 trillion won and its interest burden has expanded tremendously, I am not worried about KEPCO. However, everyone is worried about household debt that has grown as it has. Even if market interest rates rise, KEPCO will not collapse, but vulnerable households and self-employed people will collapse everywhere. The essential difference should be seen that Japan has a lot of government debt, but the household debt burden is light enough to be only 65% of GDP. This is the level of household debt burden in Korea 20 to 25 years ago, and home prices relative to income at that time were much easier than they are now.
Cancer treatment is very difficult, but if cancer seems to grow, you have to endure the pain and do it eventually. The weak yen certainly contributed to the strong performance of export companies and the rise of the Japanese stock market, but at a certain level, it made it very difficult for the Japanese people. From the perspective of Japanese households, continuing the weakening of the yen seems to be a much bigger pain than rising interest rates. I think that’s how we should understand the normalization of the Japanese currency. The pace of institutions that say ‘I can’t believe it?’ and then ‘I.. I really can’t believe it’ is showing the decline of Nasdaq.
It is clear that Korea is starting to cut interest rates, but I think about the level at which we can withstand the weakening of the won’s value. In addition to the essential concern of “Is it time to increase household debt?” we reflect on the fiscal crisis in Europe, which was a problem as the household debt problem quickly shifted to government debt.