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Notes -
What I heard: The Japanese can no longer do "carry trades" where they got very cheap loans in Yen in Japan and could invest a lot of money in US currency + markets/other markets.
There's also fears of a US recession. Unemployment is up. Warren Buffett sold a ton of stock and is holding massive amounts of cash right now.
Crypto is crashing really hard. This might be partially because the funds buying them consider them their most risky assets and thus dump them at the first sign of trouble. Small savers who need liquidity might also sell their crypto sooner than anything else. Gold seems to be the safe port of choice still, not BTC or the like.
Yes. This is the proximate reason the market crashed.
For the last couple of years you could borrow money in Yen at 1% and buy risk assets (Nasdaq, Bitcoin, Japanese equities). This worked great because interest was minimal, the risk assets all went up, and the price of Yen crashed too. It was a win, win, win.
This trade unwound in a big way last week as the Yen increased in value by 10% vs. the dollar forcing margin calls.
Of course, the bigger backdrop is all-time high overvaluations in many risk assets as the world economy (especially China) enters a recession.
Weirdly, tensions in the Middle East barely register. The price of oil is actually down bigly the last few weeks. This seems short-sighted as Iranian energy assets could come into play in the event of a hot conflict.
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