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Takeaway: Japan is just 2.5% away from falling into full-blown crash mode.

Asia is looking worse and worse by the day. China and Hong Kong were both down over 1% overnight.

Chalk it up to an ugly China exports number which was up 7%, rather than 14%. (For the record, they are making up the number. Hedgeye Macro Analyst Darius Dale was all over this a month ago.) In a nutshell, they’re making up fake invoices and last month’s number was massively inflated. Incidentally, Bloomberg wrote about it this morning: “China Export Gains Seen Halved With Fake-Data Crackdown.” It’s refreshing to see people finally acknowledging this fraudulence.

At the bottom of the Asian barrelJapan. Get this: the Weimar Nikkei is now bearish both Trade and Trend in our quantitative risk management model. Japan is within walking distance - 2.5% - of falling into full-blown crash mode, which would be a 20% peak-to-trough decline. None of this come as any real surprise to people who don’t subscribe to Japan’s Sapporo-eyed, Keynesian Kool-Aid experiment.

Krugman? Yes, Krugman is surprised.

Gong Show In Tokyo! - Nikkei Gong Show