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Carry Trade Fully Armed And Primed: JPY Shorts Near Recent Record Highs, As EUR, GBP And CHF All Remain At Net Short Spec
The latest COT report by the CFTC is out: no surprises - the JPY shorts came in at near record levels after four weeks of increasing net spec short exposure. If you need to know what the funding mechanism has been for everyone who does not have access to the Fed's discount window to buy stocks at negative carry, here you go. Everyone and their grandmother is now shorting yen and using the proceeds to buy, buy, buy all risky assets. And not just yen: all the major currency pairs had net a spec short balance the week ended April 20: EUR non-commercial shorts jumped by 15,960 to -71,424, also close to record levels, while the GBP and CHF were also being shorted as the stock buying rampage was in full nitrous mode. From a massive dollar carry trade late last year, we have no moved to an even massiver non-dollar carry trade as every non-developing central bank is rushing to keep ZIRP in perpetuity.
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Even massiver , yeah you got to have new words like that for this sort of new utter madness!
The old ones and the old sort of market fundamentals do not apply now
They are all just double-dog daring Bernanke to start lifting short-term rates. Go on Ben - take the dare!
OT
worth reading from CR
First a comment on the seasonal adjustment ... on a Not Seasonally Adjusted (NSA) basis, the Census Bureau reported there were 38,000 new homes sold in March. That is up from 31,000 in March 2009.
Some (or all) of the increase was due to a one time even
http://www.calculatedriskblog.com/2010/04/home-sales-distressing-gap.html
When you have 2 defacto reserve currencies at 0%, it's hard to see emerging markets not bubbling like hell.
The mature economies won't be the beneficiaries of all this free credit; that's the conundrum. Liquidity trap.
This is the real WMD.
So where are all the longs? AUD? CAD?
Why doesn't Greece borrow money from Japan? Obviously there is an infinite amount of liquidity which is exactly what Greece needs. Is it fear that the shorts will have to be covered some day?
I think this is what global inflation would look like, wouldn't it?
... sell those banknotes and buy "real" stuff.
DOW chart threatening to break out.
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