Confirming the stocks-are-just-high-beta-FX meme, Japanese stocks in the Nikkei 225 have collapsed 800 points in the last 2 days as JPY began to strengthen against the USD (on better data bringing taper talk and potential capital outflows as hot money chases something else). Relative to the initial 4 months of Abenomics which saw a 'beta' of 2.3 NKY points per USDJPY pip; the last week's "beta" of 5 Nikkei points per 1 pip in USDJPY, the leverage is starting to get out of hand (with a correlation of 0.965).
From November to March, the Nikkei rallied from 8700 to 13500 and USDJPY from 79 to 100 (approx 2.3x beta)
That beta has done nothing but increase and this week's sell-off is peaking at 5x!!
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Charts: Bloomberg