DislikedHave a lookIgnored
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DislikedHave a lookIgnored
DislikedThat tie is pretty well known; it just depends on the level of hot money available from Japan. China floats it's ccy (which would allow JPY to strengthen), or Japan raises rates, or any number of similar factors, that up trend will just go poof....Ignored
DislikedChina likely will not float it's currency for a long time-and even if Japan ever gets to .75, that won't stop the carry trade anyway.Ignored
DislikedBesides, the Dems are jumping on this float thing as a campaign issue. It's nonsense. Global inflation would go thru the roof if that happened.
And if you're of the "China is taking our jobs theory"-point me towards the numbers that say jobs have decreased since China got into the global economy.
DislikedWell, here one should look at individual carrys. For example, the S&P/Dow could easily become less desirable ifthe CDO issue surfaces again - and given that a large number are held as supposedly cash reserves for businesses not normally involved in trading, it could easily do so. The WSJ recently had an article on Smucker's (for example) that was getting hurt by having placed a significant portion of their operating float into CDO's; how widespread the problem is is unknown. The ECB is pouring liquidity into the market to hide the problem, when will that come home to roost (and show up in Eur/Jpy); meanwhile housing in Britain is on the ropes...Like Lt. Hearn in Mailer's "The Naked & the Dead" I'm not in the business of predicting history, I just think these are potential problems anyone looking to benefit from the carry trade should bear in mind.
As for China, what will happen if the USD falls another 20 or 30% against oil? China buys a lot, and requires lots of other commodity imports. Right now they can cope with the fall of the USD - and in fact it helps with their opening markets in Europe & Japan, but who knows how long the pain of import inflation is going to be offset by increasing exports? Bloombergs also brought up an interesting point re USD interest rates fueling the Shanghai mkt; how long will China allow that to continue via the dirty float? I just don't know. A couple of years ago China went from a peg to a dirty float - and while it was expected, it was still a surprise to the markets...
I would expect US protectionism to continue to heat up over the election period - not because the practice is right or wrong, but because people always prefer to lay the blame for their problems on others, and successful politicians by definition are adept at exploiting human weakness. Smoot-Hartley was helpful in turning what should have been a significant recession into a worldwide depression 70 years ago; I don't think politicians have learned much in the intervening decades.
FWIW, I don't think China is 'taking' anything; but I do think the US is throwing away a lot, with its addiction to debt and excess consumerism. Perhaps people should ask themselves why US personal debt continues to grow, why so many people have to hold multiple jobs, and why so many families can no longer afford to have one parent staying at home, whenever they think the jobs numbers indicate a healthy economy. It's also useful to look at exactly which sectors are providing the job growth - currently food services, health care, and local gov'ts. I don't think that's particularly healthy....Ignored
DislikedObviously if something is "normal" it's probably in that state for the large majority of the time and if you look at the US economy over a long period, it's obvioulsy true.
So what i'm suggesting is to take some lots on GBP/JPY and leave them there no matter what happens for a very long time. Years. Don't even sell on the corrections, just buy more and hold that too. It's workied very well before.Ignored
Dislikedyou're gonna thank me in 10 years or so, because you are going to be much richer at that time then you are now.
what i'm suggesting is to take some lots on GBP/JPY and leave them there no matter what happens for a very long time
Dislikedif history repeats itself...
.. could rise....
DislikedNot something I'd personally put money on. The timetable/size for it is just too big. This is years we're talking. Not my timeframe at all(=> contingency).
Interesting thoughts and musings, nonetheless.Ignored
DislikedWell, here one should look at individual carrys. For example, the S&P/Dow could easily become less desirable ifthe CDO issue surfaces again - and given that a large number are held as supposedly cash reserves for businesses not normally involved in trading, it could easily do so.Ignored
DislikedLol-down thru history, all the great thinkers have had their ideas met with resistance.
Obviously, there's no way to settle this now one way or the other so we'll just have to wait a few years.Ignored
DislikedEvery economic downturn has been a buying oppurtunity.
DislikedRecessions have gotten less frequent and are shorter lived.
When the DOW and S&P go up-the JPY crosses go up.
DislikedYou're making one simple bet here-you're betting that the world is not going into a very prolonged depression. Unless that happens-you can't lose.
DislikedOf course, if earnings surprise to the upside equity markets will likely finish out the year very well. The above JPY crosses will appreciate right along with them as the Dollar weakens vs the high yielders and gains on the Yen.
DislikedThe top economist at the arbiter of recession says that the normal state of the economy is expansion. He presented at the jackson Hole meeting and said that the fed needed to cut by an immediate 50 and that's what they did.
The GBP/JPY and other JPY crosses are attached to the economy via the equity markets, who's normal state is expansion. That means that you stay in GBP/JPY (and the other pairs too) because their normal state is expansion.
You get out of those trades when extreme economic conditions exist-like during the August liquidity squeeze. You get back in as the crisis passes.
Your making like 80% interest for the year on GBP/JPY.Ignored
DislikedThat's your explanation? CO2 levels rose during the same time. Why don't we tie the rise in GBPJPY to that?
Care to throw up some 1999-2004 graphs?Ignored
DislikedCheck with your broker and see what they pay per lot per day on the swap when you're long GBP/JPYIgnored
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