Arthur Hayes: Return of Japanese Capital and AI Debt Present Liquidity Variables

The possibility of adjusting asset allocation in Japan's public pension and the imbalance of artificial intelligence (AI) investment capital could change global liquidity flows. Arthur Hayes, Chief Investment Officer of Maelstrom, explained the connection between the return of Japanese capital and the liquidity policy of the U.S. Federal Reserve. He presented the euro-yen exchange rate (EUR/JPY) as a leading indicator showing the pace of dollar liquidity expansion, forecasting that if the Japanese government and institutional investors reduce overseas assets and increase yen-denominated assets, it could lead to yen appreciation and dollar depreciation. The Japanese Ministry of Finance stated that the GPIF's basic portfolio could be verified and adjusted according to changes in market conditions. Currently, the basic asset allocation is 25% domestic bonds, 25% foreign bonds, 25% domestic stocks, and 25% foreign stocks. The GPIF held an unusual management committee meeting in August, but there was no official announcement regarding the sale of overseas assets or the expansion of domestic assets. Hayes also suggested that if Japanese institutions sell overseas assets, it could relieve pressure on the U.S. Treasury and European bond markets, increasing the likelihood that the U.S. would supply dollar liquidity. Regarding the AI industry, he pointed out that the funding structure is a problem rather than the growth rate, stating that newly supplied liquidity could flow into Bitcoin (BTC), gold, Ethereum (ETH), and other assets. He described Ethereum as a major large position for Maelstrom.