We’ve been highlighting how S&P 500 futures and the YEN/USD cross have basically been moving tick for tick recently, so we thought it prudent to point out that the relationship has basically dissolved over the last two days, and in fact has started to reverse....
The Japanese yen carry trade, in which one barrows low cost yen to speculate in foreign markets with higher interest rates or slower money printers, is performing well today as it goes almost tick for tick with the S&P 500....
It seems a (risk on) yen funded carry trade has been one of the main drivers of stocks over the last few years, but is time running out or are we just getting started as the yen breaks to new lows against the euro?...
With the Yen having fallen below 100, it is important to understand some of the consequences. Over the last 25 years, a structurally rising Yen has been good for US profit margins....
We began opining on the deflationary impacts of Currency Wars back in January and some of those postulations are now coming to fruition – the latest being that the South Korean CPI today hit a level not seen since the aftermath of the Asian financial crisis....
The US Dollar (USD) has turned against the Euro…check. It has turned against the GBP…check. It has turned against the Yen…check. It has turned against the Swiss franc…check. And, lastly it has turned against gold…check....
If the Yen/USD keeps strengthening, the odds of Japanese stocks rising appear slim....
