#Yen Review $FXY $JPYUSD Yen Carry Trend, The Long Term Capital Management Backdrop of 2024

Yen Review

Short-term price fluctuations do not influence long-term trends, cycles, and profitability. The majority, guided by price trends and emotions, concentrate on short-term trading noise rather than cyclical trends of price, time, and energy. This focus creates confusion, frustration, missed chances, and typically leaves them holding the bag during trend shifts. Investors can sidestep this pattern by embracing the Evolution of the Trade and aligning with the minority.

The Yen’s overall trend, revealed by trends of price, leverage, and time, are defined and discussed in The Matrix for subscribers.

Subscriber Comments

The invisible hands assault on the Japanese Yen began 20 months ago. The majority remains focused on the game, it doesn’t stop the institution from burning down.

Japan and China own roughly $2 trillion in US Treasury holdings. This number was higher only a few years ago. If countries like Japan continue reducing their holdings, long-term interest rates, those not controlled by the Fed, are headed higher. The Fed does not control the long end of the curve. Remember that when the Internet continues to debate a Fed pivot. The most important concept of that debate, the Fed is not all powerful, is never discussed.

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Yen Carry Trend, The Long Term Capital Management Backdrop of 2024

Get ready

Billions of Yen have been borrowed at negative or near zero percent (interest rates), and invested throughout the world (outside Japan). This has created the Yen Carry Trade, setting up a similar backdrop created when Long Term Capital Management (When Genius Failed) failed in 1998 during the Asian Financial Crisis. The lure of unlimited profits, fueled by “easy” or cheap money. Hedge funds across the world have borrowed billions in Yen, assuming the rules of the game (low interests rates and falling Yen) would never change.

The Bank of Japan, however, began raising short-term interest rates in an effort to stabilize inflation and the Yen in March. In other words, the rules of the game have change and continue to do so. Hedge funds are not ready. The Yen is rising, which means the billions of Yen borrowed at low interest rates could no longer be serviced by the heavily leverage (and exposed) hedge funds. Capital flows reversed from flowing out of Japan (periphery economies) to the core (United States) to it. The reversal of capital flows caused the Yen to rally even further, inflecting even more pain. The unwinding of the Yen Carry Trade is the 2024 version of Long Term Capital Management failure in 1998.

There’s no stopping this until something blows up. The stock market and dollar’s decline; therefore, is likely not done.

The Yen’s primary trend will flip up in September. This will add to the pain, volatility, and future ass whippings. Get ready for September. Smart money could easily be standing aside. We’ll talk about it more in the Economy & Stocks Report. Please join to survive and thrive.  We will be watching the Timing A Correction/Crash percentages closely.

Japanese Yen

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The Matrix provides market-driven trend, cycles, and intermarket analysis.