Japan's Equities Risk Tactical Correction: Goldman's Moe

• Macro backdrop for Yen looks less supportive for appreciation now compared to 2022, despite similar record short positions.
• Japanese equity market is somewhat more vulnerable to a tactical correction due to strong performance and higher valuations.
• Goldman Sachs recently raised Topix earnings estimates by a couple of percent, baking in a weaker average exchange rate.
• Every 10-point move in USD-JPY on a one-year average basis maps to about a 4% change in earnings.

Timothy Moe of Goldman Sachs discusses the Japanese Yen and equity market following recent intervention speculation. He notes that while the Yen's macro backdrop is less supportive for appreciation compared to 2022, the Japanese equity market faces a risk of tactical correction due to higher valuations. However, Goldman Sachs remains structurally bullish on Japanese equities and has raised earnings estimates, expecting corporate earnings to remain intact.