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Global Game-Changer: ‘Biggest Carry Trade The World Has Ever Seen’ Unwinds
If anyone asks you what, exactly, happened to markets on Monday -- a session that'll live in infamy even as Wall Street managed to claw back some losses into the US afternoon -- just tell them that August 5, 2024, marked the culmination of an across-the-board global carry unwind.
On July 25, I attempted, without a lot of success I suspect, to communicate the potential for a multi-week yen surge to create serious problems should it run too much further. The Bank of Japan was rumored to be consid
Well, GOOG did just lose a lawsuit.
That definitely has my attention. Are we about to enter a new era of trust busting?
This is not trust busting. This is trying to tell businesses how to design their products and manage their services in whole new ways – essentially saying “hey, nice businesses you built. Now we want you to turn them into public utilities”.
You misspelled “monopoly”.
It’s hard to believe the Nasdaq was below 14k a year ago and closer to 10k less than 2 years, but I would be ecstatic if the Nasdaq dropped back to that range. I went long on bonds a couple months ago and it’s been a nice run, but I wouldn’t hesitate to rotate back to the Nasdaq 100 if it pulls back another 10%.
Ben Emons, an “informed” talking head on CNBC , estimates the short interest in Japanese Yen forwards and futures had reached $4 trillion, based on IMF and CME data.
If he is even remotely close, these carry trades will take more than three days to clear out.
I don’t know how this stuff works, but isn’t there someone else on the other side of those trades? So…more like $2T.
Not sure where I saw this, so value accordingly, but I read the total margin in Japanese equities was about USD 50BN, which seems capable of being cleared in a couple horrific days. Avg daily vol in Japan equity is like JPY 5TR or USD 33BN.
The top carry trade artists are not using the money raised (in US$) to buy Japanese shares. They’re buying Mexican Peso bills etc where there is a significant yield pickup versus the borrowing costs on their yen shorts. It’s a simple interest rate arbitrage which is so much better when you can lever it up by 5 or 10 times,.
Been talking about that trade since Feb 2022. It has been a belter!