Japan’s BOJ-Fueled Meltdown: Now Coming To A Theater In Your Neighborhood Soon

Yes, the collapse of the so-called yen carry trade was the proximate cause of the stock market meltdown, which gathered even more steam today on top of Friday’s drubbing. And the trillion dollar meltdowns each among the red hot crypto-verse and Magnificent Seven stocks surely added to the panic.

That’s especially after an estimated 275,000 of the “Number Go Up bros” among crypto day-traders were carried out on their shields by margin calls.

Likewise with the MAG 7, which includes TSLA, AAPL, META, GOOG, MSFT, AMZN and NVDA. As a group they had been up 104% in just over a year at the peak a few weeks ago, having been christened the “buy and hold forever” trade.

No more. After being taken out behind the barn and beaten Friday, shares today opened down even further—Apple 8%, Microsoft 5%, NVIDIA 14%, Google 6%, Amazon 8%, Meta 7% and Tesla 11%.

This septet, which accounted for about a third of the entire market capitalization-weighted S&P at Friday’s close, lost a combined $1.2 trillion in market cap within just minutes after trading began. On pace for their worst respective daily percentage drops since March 2020, Apple and Nvidia stocks were the biggest decliners in terms of market value, as Apple registered a $270 billion loss and Nvidia a $380 billion loss.

Then again, there should have been no surprise about the unfolding crack-up in the tech corner of the casino. The Mag 7 have been the overwhelming driver of the NASDAQ index, which, in turn, has basically been the entire stock market for the last year.

So when you compare the relentless southward movement of the advance/decline line (red line) with the soaring gains in the index (blue line), the skunk on the wood pile is pretty apparent. To wit, only a handful of stocks were driving the entire index, and in a manner that would put the Nifty Fifty of the early 1970s to shame.

Likewise, the homegamers, which had gotten fat and happy shorting the VIX, undoubtedly had not yet learned that picking up nickels in front of a steamroller is far more hazardous than it seems. And we do mean hazardous.