Investing General Discussion

Falstaff

Falstaff

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also interesting is the source footnote
 
Blazin

Blazin

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Gravel said:
I fail to see why this matters as much as they're saying. It sounds like a lot because the Yen is worth pennies on the dollar.

That 2.8 trillion Yen? That's like $12 billion USD.

The Yen hasn't been floating the entire global financial system. That's fucking retarded.
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Perma bears have been hoping and praying this would matter for a few years now
 
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Synj

Synj

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Blazin said:
Moves that give plenty of time for people to get on board are usually something I don't like being long. After bounce you want the pain trade to be up. The longer it sits here the more that scale moves to pain trade being down again to further disillusion the bulls. Capitulation and bottoms are a process and we just may not be done yet. I think BTC sentiment got to a pretty nice low, my biggest issue is that it is lining up so poorly with the overall market. As much as people would love a "I'm afraid BTC Rally" I think we are still far removed from that. It's a risk asset and if QQQ can't make a new high a sustainable rally becomes less likely.

Stop now moved to LOD

...edit I'm out @ $52.44
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Sanrith Descartes

Sanrith Descartes

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Gravel said:
I fail to see why this matters as much as they're saying. It sounds like a lot because the Yen is worth pennies on the dollar.

That 2.8 trillion Yen? That's like $12 billion USD.

The Yen hasn't been floating the entire global financial system. That's fucking retarded.
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So, its strictly an arbitrage play. Its not about the Yen, per se.
You borrow truckloads of Yen in Japan at what was close to zero percent interest. You then convert those yet to dollars and invest it in the US market. The conversion rate to the dollar doesn't matter as the basis has always been calculated in dollars. You cash out your winnings and then pay off the loan back in Japan while banking the profits.

The bear wet dream is the entirety of the Carry Trade needs to be unwound resulting in lots of selling in the US markets. The reality is this isn't the case. It just makes the trade less profitable. Will some unwinding be done? Sure. I think the bigger impact will be as the carry trade fades so will those investments in the US market from Carry Trade bucks.
 
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Jysin

Jysin

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I mean, there is precedent. August of last year we had a very deep dive in the overnight specifically linked to the Yen carry trade. It's not a nothing burger when it can move markets this much:

SPY Mon Aug 5th 2024

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More detail from Grok:

On Monday, August 5, 2024, US stock markets experienced a significant overnight gap down, widely attributed to the rapid unwind of the yen carry trade following the Bank of Japan's interest rate hike on July 31 and the subsequent sharp appreciation of the yen over the weekend. This event amplified global risk-off sentiment, exacerbating declines that originated in Asian markets (particularly Japan, where the Nikkei fell over 12% that day).The overnight gaps (calculated as the percentage change from the previous Friday's close on August 2 to Monday's open on August 5) for major US indices were as follows, based on their tracking ETFs:
  • S&P 500 (via SPY): -3.99% (closed at 532.90 on Aug 2; opened at 511.64 on Aug 5)
  • Nasdaq Composite (via QQQ): -5.36% (closed at 448.75 on Aug 2; opened at 424.71 on Aug 5)
  • Dow Jones Industrial Average (via DIA): -2.67% (closed at 397.13 on Aug 2; opened at 386.52 on Aug 5)
These opening gaps reflect the immediate market reaction before intraday trading, during which losses deepened further (e.g., the S&P 500 closed down about 3% for the day after hitting lows of over -4% intraday). The yen's surge—up as much as 3% against the dollar—forced investors to liquidate leveraged positions funded by cheap yen borrowing, contributing to the volatility spike and broad sell-off.
 
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Sanrith Descartes

Sanrith Descartes

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Jysin said:
I mean, there is precedent. August of last year we had a very deep dive in the overnight specifically linked to the Yen carry trade. It's not a nothing burger when it can move markets this much:

SPY Mon Aug 5th 2024

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My thought is this one is a little more telegraphed with the new PM being elected. I don't see a massive OMFG unwind reaction.
 
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