It would seem, in the case of momo-chasing levered fast-money flows, that Propertius was correct - "fickleness has always befriended the beautiful..." and Japanese stocks are no longer the once beautiful trend that Abe had promised them to be. A tapering of the US flow; a ripple across the bow of emerging markets; and suddenly Kyle Bass' sarcastically-named "macro tourists" are running for exits [6]as Shakespeare himself once wrote, "was ever feather so lightly blown to and fro as this multitude." Historical quotations aside, the last time flow swung so violently negative, the Nikkei ended up losing 55% in the next 18 months. We love the smell of nay-sayers in the morning...
Foreigners sold the most Japanese stocks last week since 2010 and before that since the credit crisis started to implode...
[7]
This outflow was 3x the size of the entire selling following the tumble in May/June last year.
and just in case you are banking on that flowing back to the US... think again - as we are trying to explain [8] - it's not real money, it's credit-created leverage...
The ironists among market punters will even attempt to construe all this as a reason to buy more developed world stocks on the premise that the money flooding out of such places as Thailand, the Ukraine, Turkey, and Argentina will be parked in the S&P and the DAX (perhaps overlooking the fact that the purchase price of these now-unwanted positions was most likely borrowed, meaning that their liquidation will also extinguish the associated credit, not re-allocate it).
A gentle reminder of days gone by when rational investors roamed the markets...
Charts: Bloomberg