Kyle Bass Calls Longs of Japanese Stocks “Macro Tourists” , Says Things May Not End Well For Them

“Kyle Bass has been betting that Japan, which has the highest government debt-to-GDP ratio in the world, will eventually lose control of the bond market once investors wake up to this concept.

(Shorting Japanese bonds is known as the widowmaker trade, because it seems like an obvious conclusion to many traders, but it never bears itself out.)

Naturally, Bass is also bearish on the yen. If the Bank of Japan lost control of the bond market, it would presumably be bad news for the country’s currency. So, he’s been doing well in recent months as the yen has quickly declined against the dollar.

Betting against the yen has become one of the hottest trades in the world. A natural extension of that trade for many has been to buy Japanese stocks. After all, a weaker yen usually means higher stocks, as Citi strategist Steven Englander pointed out yesterday.

Bass doesn’t think the “buy stocks” part of the trade is such a great idea.

Kyle Bass was on CNBC today to discuss the BoJ’s decision last night to double the size of its asset purchases over the next two years, and he even went so far as to call those investing in Japanese stocks “macro tourists.”

Below is what Bass had to say….”

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