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USDJPY Flash Crashes As All Support Taken Out - Record Collapse
Support broken as the dollar yen plunges to an all time record low. Everyone now watching the Nikkei to see if it opens. That the BOJ has not intervened yet is beyond ominous, and nothing short of a death sentence for the Yen carry traders.
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Fuck me running
They are intervening... they are BUYING Yen and Selling Dollar. Stop the disinformation.
I say things are fucked.
+$700b thrown into the fire already.
as long as everybody can warm their hands on it
AUDJPY chart looks like it did before the flash crash. May be a very interesting overnight session.
They brought in Bernanke to consult on how to print more than you can count
Where do you get the idea that they are selling dollars to buy yen? I haven't seen any stories to that effect.
Uh, hello? Is anyone home, tmosely?
The Japanese are selling their dollars to buy yen, en masse.
They are calling in all their investments to survive another day at home (and later rebuild). This is what happened after the Kobe earthquake but not to nowhere near the same extent.
When the Japanese sell their dollars, they will NOT be buying more US Treasuries at Bernanke's estate sales, which means Obama and Geithner better start cutting spending fast, or we are "SOL" like Greece and the PIIGS.
This is serious. I smell QE3.
P.s. If you have to wait for the media to spoon feed you,after the game has been played out, then you are probably another one of the sheeple.
BECAUSE they have been intervening for the last 3-4 days. They clearly wanted to buy some Yen first, because they will have to Monetize it further and support the Nikkei for the forseeable future. As evident by the market ITSELF.
If you are waiting for ZH or MSM to tell you what to do, I hope you are not trading. If you are just observing the market. You can see that G7 and Japan have reached an accord... JPY will eventually hit 100+... because they NEED to for commerce.
Holy shit. Look at that drop.
and yet the treasury market rallies.
O.K
Everyone grab your ankles!
So I'm confused, didn't Japan just print the equivalant of 10% of GDP? And the Yen surges? Really? The dollar must be completely fucked...
can I still buy off the dollar menu?
At this point, an all out depression is preferable. Kiss the stock and bond markets goodbye.
Thank God the USA has no money to wage anymore wars.
Ben just had 12 tanker trucks pull up with yellow,magenta,cyan & black. And he has a virtual keyboard the only Central Banker with this luxury ....
Digital zeros and ones on Ben's magnetic hard drive medium will soon be valued in Zimbabwe dollars.
No worries ....
............ " But there are pockets of optimism, including Robert Shiller’s luncheon speech about the potential benefits of continued financial innovation. One of Shiller’s ideas is that the federal government should issue a new kind of security that would pay quarterly dividends based on the nation’s gross domestic product (GDP). More specifically, each security would entitle its owner to one-trillionth of America’s gross domestic product (GDP). These “Trills” would be perpetual, like common stock in a private company, and would be backed by the government’s full faith and credit.
I will leave to others to argue the pros and cons of Trills. What caught my attention was Shiller’s estimate of how much they would be worth. With GDP around $14 trillion, each Trill would pay about $14 in annual dividends this year. That dividend would then increase (or, of course, decrease) as the economy grows (or contracts) in the future.
How much you would be willing to pay for a Trill? In principle, that should depend on your expectations of future GDP growth and your choice of what discount rate to apply to cash flows that track GDP. Oh, and if you worry about the U.S. government defaulting (still a very low risk), you might include a discount for that as well.
That figure feels a bit high to me, but not unreasonable. For example, you could justify a $1,400 per Trill valuation if you believe that nominal GDP growth will be 4 percent and that an appropriate discount rate would be 5 percent.
If you take Shiller’s estimate seriously, it is just a short step to placing a value on the U.S. economy as a whole. If one trillionth of the economy is worth $1,400, then the entire economy would be worth $1.4 quadrillion." ........................
http://dmarron.com/2010/01/04/whats-the-united-states-worth-1-4-quadrill...
Have you actually smoked that much moonweed you believe this bullshit?
Right, because printing trillions of fresh US Dollars need a "valid" excuse.
Financial innovation, bitch .... Follow the money, all of it ....
Who audits the fed ? Who virtual black hole for dumping toxic assets......
I hate it but also but don't hate the player ....
You realize you can't spend that stuff buying stuff. You will be able to paper your walls with it, if you have walls.
They have been saying the same thing a half of quadrillion ago ..... Nothing has changed.
Inflation is exported via all the countries that peg. More than half the countries around the globe.
The interesting thing about Shiller's idea is that he inadvertantly confesses what I have believed for awhile now, that the United States "owns" all its citizens. If I understand Shiller's idea correctly its essentially selling stock in the U.S. and our total output pays the dividend. Whoever buys the trills owns the output of the country. The United States Government would have to have unlimited taxing power to pay this. It's not a share of tax receipts. It's a share of all output.
In any case, issuing unlimited Federal Reserve Notes actually does about the same thing except we can't buy into it.
I submit that in actuality our government has arrived at the point of unlimited power through taxation, regulation, currency manipulation and wholesale abandonment of the Constitution (with the aid of the Supremes). What bugs me is how many of us are really OK with that...about half the country by my reckoning. In fact, the financial types are excited as long as they can make money off of it. I don't think they give a damn if a Hitler, Stalin, Castro, Chavez or even a theocrat rules as long as they get or stay wealthy from it...and keep their hands in the revenue streams and privelages.
My main point being the games not changing, China is not ready, the EU (27 countries under one rate ) thats not an option, so we have a shared basket some day or a reset. The USA will always make up the majority or be on equal footing. To much debt in the system via dollars, securitization, bonds, letters of credit, the cb's, commodities, primary bankers and most of the global banking system .... Everyone must pay down this debt that is owed in dollars, 2,10,20 years out in some cases.
Not ready, according to whom?
As we previously discussed, the US Dollar is losing territory as invoicing currency, on global security issues, and in global debt markets. And that's when your ridiculous "US Economy = 1 brazilian Dollars" theory, along with insurance = principal, entered the picture last time.
Please explain to us again how a credit default swap in fact is debt, and whilst you're at it, explain how a call option in fact is equity.
Like I said if a credit default swap was not money owed why was the bailout of AIG needed. And why did the EU hedge funds go ape shit when Lehman went under in the U.K.. The securitization market is global .... Debt owed. You can say they all even out but still your talking 1/2 of quadrillion then ....
Also credit and treasuries are not money in the system, they do not have any bearing on velocity of the current money supply.
..........“Sir, George Soros (“The false belief at the heart of the financial turmoil”, April 3) suggests establishing a credit default swaps clearing house or exchange as an institutional mechanism for reducing counterparty risk in this $45,000 bn (notional) market. We have been here before also. Walter Bagehot’s Lombard Street explains how a bank’s acceptance of a bill of exchange (in effect a CDS) turned an illiquid asset into a liquid one." ......
http://cedar.barnard.columbia.edu/faculty/mehrling/Mehrling_Financial_Re...
A CDS is not debt. It's an insurance contract. AIG should have been allowed to fail, in which case the CDS contracts would have been worth nothing.
Besides - even according to your own argument - you only focus on the insurance contracts which paid out. All the rest - the vast majority - never paid out, and hence couldn't even begin to be counted as debt, even according to your ridiculous argument, which will double, triple, quadruplecount every re-insured position. Again, net notional is what you want to focus on.
Anyway, I'm off to bed now, so no point in asking where I've gone. UK time and all. Sleep tight and dream happily of quadrillions of CDS contracts.
So now your argument digresses to " they should not have bailed them out "...
Sleep tight ....
As stated above net notional, I'm focused now, $45,000 bn.... Got it.
ir code added 401k language in 1978. 401k officially started in jan 1980.
wonder what kind of ponzi addendum they'll come up with this time to suppress pm prices and keep people holding dollars.
when pm's skyrocket... all that purchasing power will be derived (transferred) from everyone's retirement account. thanks uncle sam.
Why fuck with a Trill when you've got a perfectly good instrument. Gold.
Trill. Funny how it rhymes with shill, another fuckin' piece of paper to ponzify us with.
That is funny as all HELL! That Whale tale made me laugh my ass off.
God has no hand in this game.
Thank the U.S. Federal Government.
In all seriousness, don't they HAVE to open it to intervene?
No, different markets. Though intervention without the ability to "do anything" via the Nikkei wouldn't do much.
Exactly, they work in tandem. What's the point without the equity raise?
No, more effective if they do it through other markets. Could be a week plus close.
Could really mess with Euro re: Greece and Portugal, as localized central bank activities catch fire. While Japanese disasters make legit, other countries will glom on and use technique too.
Lets go trend lines. Under/over?
Peter Schiff says Japan needs a stronger Yen, is he wrong?
Yeah, exports really aren't all that important to the Japanese economy . . . [/sarc]
There are no more exports, they have all been shut down. No reason not to let it appreciate at this point, other than cargo cult behavior.
Export what? Their manufacturing base will be seriously affected by this.
Schiff is right, a stronger Yen will allow them to buy the things they need to rebuild. They have foreign reserves. If they don't make use of that savings to get them through this situation, when will they ever? As Peter said, they've been saving for a rainy day and now it's raining ... big time.
Budget deficitzzz
It is not recovering. Not a typical flash crash.
Arrrr, die yen carry traders die--wait, who are the Yen carry traders again?
Investment banks and hedge funds plus yield chasing dopes like Pimco/CalPERS?
who are the Yen carry traders again?
only the guys who are leveraged 500 to 1
At least all that newly printed yen will buy more stuff to rebuild.
yen carry traders weren't trying hard enough
79.20. Whatever they supposedly do, it ain't working.
edit: 79.12. 79.10. 79.08. 79.04. 78.96. 78.87.
Fuck!
78.62. Go to the fucking supermarket NOW if you're not stocked up/.
78.27.
77.70...it is ugly.
FUCK. Watching this thing swan dive...
My trading terminal looks like they gave up with intervention.
Straight fuckin' down.
WOW, this is breathtaking.
"The Formula" is 100% correct.
The more you print, the higher your currency goes. Monetary restraint is a loser's game.
"Paper" rules over "Things"
Want proof? The Japanese Thugocracy is about to engage on a monstrous printing campaign, and that news sends the Yen up to new highs on world record volume.
Wow, Uncle Ben should take note, and perhaps announce QE.XXX in order to boost the U.S. Dollar.
headroom
First, you are absolutely incorrect and the other variables don't even need to be explained.
Two, I thought you went away.
Three, just because you post a fucking 9 month chart you pulled off yahoo finance, doesn't mean you know shit about shit.
Junked @ absence of argument (and SharpCharts® is superior to plebe-serving yahoo finance).
blah, blah, blah. how's about that summation index? or, did you fight the fed today?
also, how's that "easy" money jpm trade coming?
What? you're joking, right?
I love reading charts. Problem is? I can't draw the NECK LINE.
HOLY FUCKING SHIT!!!@!!!!
I think the plan all along was for Japan to default on everything....how better to get out from under 20 years of no growth, and become the leading growth country in the world than from these events?
Presuming they get to use the island after the meltdown... or that the world wants to buy their products, despite being very well built in general.
Holy Shit!
AUD having a hard time of late as well. Just dropped 50 pips in a flash!
And once again the gold stocks tanked right along with the S&P. No safe haven once again. AT least this time I bolted quickly
BIG difference between gold (safe haven) and gold stocks (highly speculative)
Jesus. And why would the BOJ step into this wealth furnace with another intervention?
FX newbie here. Can anyone give us a brief summary of why this is ominous (which is pretty evident given the comments above) and subsequent implications?
Not sure if I can give you a brief summary, but I will give it a shot.
1. Japan is, by and large, an export economy.
2. An export economy sells more products when it's currency is weak, because those products are relatively cheap in the countries it exports to (due to exchange rate purchasing power).
3. As export economies mature, their currency tends to appreciate, but in Japan's case, the BoJ intervened and began a program of purchasing US treasuries to strengthen the dollar and weaken the Yen, and lowering the Japanese primary rate (bonds, overnight cash).
4. This led to a credit bubble/real estate bubble which ridiculously indebted everyone in Japan.
5. As a consequence of (4) BoJ lending to the domestic market came to a virtual halt, but given the low interest rates, foreign lending increased (particularly to US, Eur and AU). This is known as the carry trade. Borrow short in Yen, lend long in local currency.
6. The FX risk of the carry trade (5) is only lightly hedged, given the traditional stability of the BoJ and Yen interest rates (most common hedge are FX swaps). As a result, carry trade books have significant exposure to Yen, which traditionally has not been a problem, given previously mentioned stability of the BoJ.
7. The stability of the BoJ is now challenged, given that they now need to (a) calm financial markets with liquidity injections (b) will need Yen for re-building 40,000 homes and (c) they have a massive nuclear plant that may go critical soon which would be a clusterfuck of biblical proportions.
Consequently, the BoJs ability to weaken the Yen by purchasing UST is now severely compromised, and so it is likely that (1) the undervalued Yen will appreciate to the market price and (2) the BoJ will need to sell UST to pay for (a,b and c) above.
Hence, those carry traders who are exposed to Yen are borked (like the f*ckwit AU banks). Those who are exposed to Yen hedges (FX derivatives, options, forwards, futures, swaps etc) are either in the money or borked. But here is the real kicker: The FX market is a 24hr, 7 day per week, interbank market. It never closes. In fact, to close the FX market, even for 1 day would be a greater financial catastrophe than banks blowing up due to FX exposure to Yen. So now we have the perfect black swan event :)
Outstanding XP; thank you very much. Very helpful.
Also, thanks for sugar-coating it: "clusterfuck of biblical proportions"
:-)
+1. Very good.
What they need (oh, pretty please, beg the traders) to do vs. what's going to happen could represent quite a chasm.
Agreed. Given that they have somewhere between 30,000 and 100,000 people without food water, heating, housing, almost a million without electricity, a nuclear reactor that could melt down at any minute, massive debris fields and aftershocks, and so far the only thing the Japanese government seems interested in is the financial sector (i.e. witness announcement of stimulus and liquidity), it's hard to know what they will do, given that they don't seem to give a shit about the population they supposedly represent.
If I were a Japanese citizen in NE Japan, what I would want to see is the whole Diet commit seppuku on national TV for their (mishandling) of this mess.
So the really big question is: Will this bring about political change in Japan. If that were to happen, then all bets are off.
+10!
Though, i don't expect the longer us bonds to see any sell preasure, not in this 'clusterfuck of biblical' situation.
77.59... sweet jesus
76.29 just flashed up - this is insane
I tried to be a smart ass and play the USD/JPY for a little bounce @ 79.49...promptly got my ass handed to me. That was fucking BRUTAL!
The people of Iceland are laughing.
+1
WTF does Kerry Katona have to do with it?
ha. ha. very likely.
BTD?
tried that. found myself a few thousand dollars poorer in a fuckin nanosecond. OUCH!!!!!
I'm as flat as the Devil crawling under a rattle snake.
This is the big sucking sound of yen repatriation. Once its done, the yen will do nothing but death spiral and we will bust through 100 by the end of this year and some.
still going...fuck me. there has got to be a bounce in here somewhere...but right now OMFG!!!!
If the Yen drops against the Banana Ben Buck, does this mean the Nikkei index goes up? After all, whenever the dollar dropped, the US stock markets shot up. Therefore, shouldn't Japan's gov't be happy about this?
It's not dropping....
The USD is crashing versus the Yen. You are backwards Homer.
Thank you for setting the record straight for the above replies..
76 mothra forkin 59?
77. Chinese kicking the Japanese while they are down?
what is the yen carry trade ? any explanation appriciated
Yen carry trade is when people borrow yen at low rates, convert it to a currency like the AUD to get paid at the higher prevailing rates in that country.
Now you are seeing the reverse as cash is needed in Japan.
As people hoard the yen to buy supplies and due to the extreme uncertainty, the velocity of the yen is approaching zero. Textbook unwind. Wish I owned more right now.
Simplest form ... borrow money in the form of yen and buy stock in dollars.
Learn to spell and we will exponiate!
Bloomberg 6 weeks ago had Japanese housewives record short yen; long Aud, Cad, New Z.
Gonna be a whole lotta totally screwed Japanese housewives; in manner of speaking.
The yen MoMs? Loook@ CFTC charts . or go to the TFCE. Tokyo Financial Exchange.
Any BTFD Mantra Munchers outa here?
CNBC fella is making a strong case for a weaker yen.
Benny-San know print plenty Benny-Yenny. Tora Tora Tora, Benny-San-Yankee.
Wilmaaaa!
Kool fACE PLATE. NIiCe work! Mr. Slate is on it.
Holy shit, have you seen EUR-USD in the last 20 minutes?
crazy moves, get scalping
There's nothing like a near instantaneous 60 pip move to wake you up.
I'm square.
Who honestly still uses yen as a carry trade though. when all it has done is strengthen against the real carry trade currency of the last 2 years , the dollar. If i want cheap leverage im hitting up Ben not Ben-San.
I'm perplexed, having shorted gold and silver an hour ago(expecting margin call inspired liquidations) but nothing, they're just standing strong, no move at all. Maybe here's where they show their true safe haven qualities. hopefully, despite my shorts
carry traders? ...clean out!
BOJ hasn't intervened because the filthy bankstas probably left town.
Oh yeah. They're gone. I'm amused at the deep, cynical pervasiveness of moral hazard, as all the traders get on their knees to the Central Banks begging for intervention. heh. Empathy for the people of Japan - high. Empathy for those who have profited for so long from "innovative financial istruments" and fees - nonexistant.
Something very wrong is going on. I'm not much into FX world, but I have never seen EURCHF drop by 2% a day. Neither have I observed EURCHF decline by 2,50% ! Could anyone explain this? Flight to safety (which Swissie is) or something to do with Tyler's post about UBS EURCHF manipulation (driving EURCHF artificially lower)?
Looks like they are intervening now.
usd/jpy....is going apeshit!! I'm speechless. There is no way the Nikkei opens. 77.34 and dropping...
The big bags of rice were almost gone...
AUD/JPY even worse. The $1 trillion borrowed from the world by the Aussies to keep their house bubble inflated is being repatriated at a rapid rate. The next rumble from the east will not be an earthquake but the pop of the Aussie house market and the lifestyle downunder.
Does any one get irritated when we talk to our loved ones and they accuse us of drinking or taking drugs, because we are in the ZONE of Requiem with each other?
I have a trade to make. Just one. EUR/JPY! Whoop ass all.