Japan held its rates at or near 0% for 15 years. As such, investors began borrowing trillions of yen and investing them in stronger currencies and assets. Essentially, it was a bet that the Yen would continue to fall in comparative value. It worked well...until last Wednesday. Japan's central bank finally hiked rates a bit, just to .25% which is still insanely low, but it spiked the value of the yen by 7.5% compared to the US$ and forced investors to cover their short positions to the tune of billions. Creating enormous losses (Trillions?) This was called the "yen carry trade." It appears to have ended this week. To cover those losses it requires liquidity and liquidity is achieved by selling off other performing assets. Hence, the global sell off. I figured many of you would be wondering why your portfolios are getting hammered. This is why. One other major bearish force which I think helped to set this off (I havent seen anyone else discuss this in detail): Japan imports most of the oil it needs to function. They produce about 2 million barrels of oil per day but consume twice that or more. This means Japan imports a ton of oil. Well, Iran is promising a major strike against Israel in response to the surprise Tehran strike last week. It is expected to happen this week (possibly today). When they do, all bets are off. Israel and the US could move on Iran and if they do I would expect Iran to immediately shut down the Strait of Hormuz. Why does that matter? 20 million barrels of oil per day get funneled through this waterway. Global price of oil skyrockets. Japan gets cooked. I could go on for hours but I'll end it there. In short, let's hope cooler heads prevail and a wider war with Iran can be avoided. The global economy likely depends on it.