At the beginning of April, Kyle Bass went on CNBC and slammed the “macro tourists” that were driving up Japanese stock prices.
Note: The term “macro tourist” refers to someone who is not a traditional macro expert stepping out of one’s comfort zone to make big bets based on one’s own (often flawed) notion of economics.
Today, Bass blames the macro tourists for the historic 7.3% plunge in the Nikkei 225 last night.
Here’s what he had to say on CNBC just now:
When you look at Japan, it looks to me like their industry has been hollowed out over the last 15 years, analogous to the U.S. manufacturing business getting hollowed out in the late 70s and 80s.
They’ve been exporting jobs overseas because of the strengthening yen. So, I think the weakening yen – if you look at the balance of trade data from the Ministry of Finance, you see exports moving up about 5% year over year, but imports moving up about 3-3.5% – they still have a balance of payments deficit even after the yen has [weakened] materially from its [highs].
I don’t think that it’s the panacea that equity investors think it is.
I think that the people that have bought into the Nikkei – I refer to them as macro tourists – I think they are renting the stocks. They’re not really owning them. And that’s why you see movements like you see today.
As we noted earlier, given how highly leveraged the Japan trade has been, some have been waiting for a big unwind.