Global Margin Call In Progress

Globalization's second derivative weakness is economic. It's first derivative weakness is financial vis-a-vis cross-border capital flows. Six sigma currency moves like those seen on Friday lead to massive risk market dislocations...

Global stocks (ex-U.S.) dropped -7% yesterday:

Ironically, the stock market that took the worst pounding was NOT the London FTSE, it was Japan's Nikkei. The London FTSE outperformed almost every other stock market in the WORLD, including the U.S.

The Nikkei took the worst beating because Japan's experiment in money printing is imploding in real time...

"Don't tell me - I know I've seen this before"

The craziest thing I saw Thursday night was the Dollar Yen crash vertically -6% in a straight line from 106 to 99 instantly. The problem from a Japanese standpoint is that their currency didn't just gain against the dollar, it gained against EVERY currency in the entire world. Including a +15% gain against the British pound...

USDJPY with BOJ balance sheet ($ trillions)

Their balance sheet grows at a rate of a $1 trillion dollars per year, most of which goes overseas. Now $4 trillion is unwinding at an accelerated rate. Every strengthening of the Yen means more pain for carry traders. The Bank of Japan pledged on Friday to "do whatever it takes" to defend against further rise in their currency. However, they alone can't defend their currency vis-a-vis every other currency in the world. Even if they defend USDJPY, what about Euro, GBP, Aussie, China Yuan, C$ etc...

Whatever it takes: A Time Machine...

Their efforts to defend the currency show an attenuating fractal indicating loss of control...

Yen with S&P:
Skynet's favourite source of liquidity is leaving the building...