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One Bank’s Clients Know Exactly What To Do In The Event Of A Vicious Carry Trade Unwind…
Way back... errr... way back "yesterday," we showed you the following chart from Deutsche Bank’s Aleksandar Kocic which diagrams all of the ways a Fed hike can trigger transient bouts of volatility across markets:
There's a lot going on there, but one of the most obvious concerns is that DM policy normalization will trigger an unwind in the carry bonanza that's helped propel everything with an "EM" prefix into the stratosphere (that's hyperbolic, but you know, it's Heisenberg, so what do y
Amusing to have asked what clients of those two technically insolvent, zombie financials will do in any sort of crisis, as they’ll almost certainly lose all they have there suddenly with little warning – deservedly so for having been so stupid and not checked out beforehand.
I that know that one has a rehypothecation clause in the terms & conditions of all client accounts. Your assets there are no longer your assets fools, and you’re just an unsecured creditor in an institution whose liabilities (many of which are off balance sheet) exceed its assets.