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USDJPY Flash Crashes As All Support Taken Out - Record Collapse

Tyler Durden's picture


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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Wed, 03/16/2011 - 17:04 | 1063106 Id fight Gandhi
Id fight Gandhi's picture

Fuck me running

Wed, 03/16/2011 - 17:08 | 1063122 What does it al...
What does it all mean's picture

They are intervening... they are BUYING Yen and Selling Dollar. Stop the disinformation.

Wed, 03/16/2011 - 17:09 | 1063130 Id fight Gandhi
Id fight Gandhi's picture

I say things are fucked.

Wed, 03/16/2011 - 17:11 | 1063142 MachoMan
MachoMan's picture

+$700b thrown into the fire already.

Wed, 03/16/2011 - 17:12 | 1063152 sockcutter moto...
sockcutter motorforker's picture

as long as everybody can warm their hands on it

Wed, 03/16/2011 - 17:18 | 1063200 SpeakerFTD
SpeakerFTD's picture

AUDJPY chart looks like it did before the flash crash.   May be a very interesting overnight session.

Wed, 03/16/2011 - 18:09 | 1063573 bbaez
bbaez's picture

They brought in Bernanke to consult on how to print more than you can count

Wed, 03/16/2011 - 17:11 | 1063160 tmosley
tmosley's picture

Where do you get the idea that they are selling dollars to buy yen?  I haven't seen any stories to that effect.

Wed, 03/16/2011 - 22:29 | 1064888 Carl Spackler
Carl Spackler's picture

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.

Fri, 03/18/2011 - 05:48 | 1070454 What does it al...
What does it all mean's picture

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.

Wed, 03/16/2011 - 17:14 | 1063173 cswjr
cswjr's picture

Holy shit.  Look at that drop.

Wed, 03/16/2011 - 23:29 | 1065209 jeff montanye
jeff montanye's picture

and yet the treasury market rallies.  

Wed, 03/16/2011 - 18:06 | 1063561 cheesewizz
cheesewizz's picture


Wed, 03/16/2011 - 19:16 | 1063931 samlowrey
samlowrey's picture

Everyone grab your ankles!

Wed, 03/16/2011 - 22:32 | 1064920 zaphod
zaphod's picture

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...

Wed, 03/16/2011 - 17:06 | 1063107 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

can I still buy off the dollar menu?

Wed, 03/16/2011 - 17:12 | 1063135 Michael
Michael's picture

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.

Wed, 03/16/2011 - 17:22 | 1063222 Spalding_Smailes
Spalding_Smailes's picture

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 ....

Wed, 03/16/2011 - 17:26 | 1063302 Michael
Michael's picture

Digital zeros and ones on Ben's magnetic hard drive medium will soon be valued in Zimbabwe dollars.

Wed, 03/16/2011 - 17:33 | 1063343 Spalding_Smailes
Spalding_Smailes's picture

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." ........................


Wed, 03/16/2011 - 17:38 | 1063393 EscapeKey
EscapeKey's picture

Have you actually smoked that much moonweed you believe this bullshit?

Right, because printing trillions of fresh US Dollars need a "valid" excuse.

Wed, 03/16/2011 - 17:57 | 1063477 Spalding_Smailes
Spalding_Smailes's picture

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 ....

Wed, 03/16/2011 - 17:58 | 1063505 Canucklehead
Canucklehead's picture

You realize you can't spend that stuff buying stuff.  You will be able to paper your walls with it, if you have walls.

Wed, 03/16/2011 - 18:00 | 1063514 Spalding_Smailes
Spalding_Smailes's picture

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.

Wed, 03/16/2011 - 18:10 | 1063584 FreedomGuy
FreedomGuy's picture

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.

Wed, 03/16/2011 - 18:19 | 1063622 Spalding_Smailes
Spalding_Smailes's picture

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.

Wed, 03/16/2011 - 18:24 | 1063670 EscapeKey
EscapeKey's picture

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.

Wed, 03/16/2011 - 18:39 | 1063727 Spalding_Smailes
Spalding_Smailes's picture

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." ......

Wed, 03/16/2011 - 18:41 | 1063767 EscapeKey
EscapeKey's picture

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.

Wed, 03/16/2011 - 18:47 | 1063815 Spalding_Smailes
Spalding_Smailes's picture

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.

Wed, 03/16/2011 - 19:34 | 1063994 medicalstudent
medicalstudent's picture

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.

Wed, 03/16/2011 - 19:45 | 1064028 Absinthe Minded
Absinthe Minded's picture

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.

Wed, 03/16/2011 - 19:59 | 1064092 Yen Cross
Yen Cross's picture

That is funny as all HELL! That Whale tale made me laugh my ass off.

Wed, 03/16/2011 - 17:19 | 1063227 Cash_is_Trash
Cash_is_Trash's picture

God has no hand in this game.

Thank the U.S. Federal Government.

Wed, 03/16/2011 - 17:04 | 1063109 Boilermaker
Boilermaker's picture

In all seriousness, don't they HAVE to open it to intervene?

Wed, 03/16/2011 - 17:06 | 1063120 cswjr
cswjr's picture

No, different markets.  Though intervention without the ability to "do anything" via the Nikkei wouldn't do much.

Wed, 03/16/2011 - 17:09 | 1063132 Boilermaker
Boilermaker's picture

Exactly, they work in tandem.  What's the point without the equity raise?

Wed, 03/16/2011 - 17:11 | 1063147 Cleanclog
Cleanclog's picture

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.

Wed, 03/16/2011 - 19:59 | 1064098 Yen Cross
Yen Cross's picture

Lets go trend lines. Under/over?

Wed, 03/16/2011 - 17:05 | 1063113 e_u_r_o
e_u_r_o's picture

Peter Schiff says Japan needs a stronger Yen, is he wrong?

Wed, 03/16/2011 - 17:09 | 1063131 4shzl
4shzl's picture

Yeah, exports really aren't all that important to the Japanese economy . . . [/sarc]

Wed, 03/16/2011 - 17:13 | 1063176 tmosley
tmosley's picture

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.

Wed, 03/16/2011 - 17:17 | 1063188 GoldenDragon
GoldenDragon's picture

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.

Wed, 03/16/2011 - 17:22 | 1063246 Cash_is_Trash
Cash_is_Trash's picture

Budget deficitzzz

Wed, 03/16/2011 - 17:07 | 1063117 EscapeKey
EscapeKey's picture

It is not recovering. Not a typical flash crash.

Wed, 03/16/2011 - 17:06 | 1063125 Jim in MN
Jim in MN's picture

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? 

Wed, 03/16/2011 - 17:15 | 1063190 Squid-puppets a...
Squid-puppets a-go-go's picture

 who are the Yen carry traders again?

only the guys who are leveraged 500 to 1

Wed, 03/16/2011 - 17:10 | 1063139 Id fight Gandhi
Id fight Gandhi's picture

At least all that newly printed yen will buy more stuff to rebuild.

Wed, 03/16/2011 - 17:09 | 1063143 sockcutter moto...
sockcutter motorforker's picture

yen carry traders weren't trying hard enough

Wed, 03/16/2011 - 17:13 | 1063145 EscapeKey
EscapeKey's picture

79.20. Whatever they supposedly do, it ain't working.

edit: 79.12. 79.10. 79.08. 79.04. 78.96. 78.87.


78.62. Go to the fucking supermarket NOW if you're not stocked up/.


Wed, 03/16/2011 - 17:15 | 1063174 hedgeless_horseman
hedgeless_horseman's picture is ugly.

Wed, 03/16/2011 - 17:15 | 1063180 MachoMan
MachoMan's picture

FUCK.  Watching this thing swan dive... 

Wed, 03/16/2011 - 17:13 | 1063153 bob_dabolina
bob_dabolina's picture

My trading terminal looks like they gave up with intervention.

Straight fuckin' down.

WOW, this is breathtaking.

Wed, 03/16/2011 - 17:11 | 1063155 RobotTrader
RobotTrader's picture

"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.

Wed, 03/16/2011 - 17:17 | 1063192 InconvenientCou...
InconvenientCounterParty's picture


Wed, 03/16/2011 - 17:20 | 1063225 Robot Traders Mom
Robot Traders Mom's picture

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.  


Wed, 03/16/2011 - 21:50 | 1064668 Ludwig Van
Ludwig Van's picture


Junked @ absence of argument (and SharpCharts® is superior to plebe-serving yahoo finance).


Wed, 03/16/2011 - 17:28 | 1063324 lieutenantjohnchard
lieutenantjohnchard's picture

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?

Wed, 03/16/2011 - 18:17 | 1063632 IQ 145
IQ 145's picture

 What? you're joking, right?

Wed, 03/16/2011 - 20:03 | 1064111 Yen Cross
Yen Cross's picture

I love reading charts. Problem is? I can't draw the NECK LINE.

Wed, 03/16/2011 - 17:13 | 1063156 alien-IQ
alien-IQ's picture


Wed, 03/16/2011 - 17:13 | 1063161 jkruffin
jkruffin's picture

I think the plan all along was for Japan to default on better to get out from under 20 years of no growth, and become the leading growth country in the world than from these events?

Wed, 03/16/2011 - 17:17 | 1063197 MachoMan
MachoMan's picture

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.

Wed, 03/16/2011 - 17:14 | 1063168 bob_dabolina
bob_dabolina's picture

Holy Shit!

Wed, 03/16/2011 - 17:14 | 1063169 PeterB
PeterB's picture

AUD having a hard time of late as well. Just dropped 50 pips in a flash!

Wed, 03/16/2011 - 17:14 | 1063171 BORT
BORT's picture

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

Wed, 03/16/2011 - 17:23 | 1063285 Buckaroo Banzai
Buckaroo Banzai's picture

BIG difference between gold (safe haven) and gold stocks (highly speculative)

Wed, 03/16/2011 - 17:16 | 1063183 John McCloy
John McCloy's picture

Jesus. And why would the BOJ step into this wealth furnace with another intervention? 

Wed, 03/16/2011 - 17:16 | 1063204 farragut
farragut's picture

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?

Wed, 03/16/2011 - 17:58 | 1063501 XPolemic
XPolemic's picture

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 :)

Wed, 03/16/2011 - 18:07 | 1063555 farragut
farragut's picture

Outstanding XP; thank you very much. Very helpful.

Also, thanks for sugar-coating it: "clusterfuck of biblical proportions"


Wed, 03/16/2011 - 18:14 | 1063619 EscapeKey
EscapeKey's picture

+1. Very good.

Wed, 03/16/2011 - 18:36 | 1063756 greenfire
greenfire's picture

  that they now need to (a) calm financial markets with liquidity injections


What they need (oh, pretty please, beg the traders) to do vs. what's going to happen could represent quite a chasm.

Wed, 03/16/2011 - 19:42 | 1064020 XPolemic
XPolemic's picture

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.

Wed, 03/16/2011 - 18:53 | 1063840 anyways
anyways's picture


Though, i don't expect the longer us bonds to see any sell preasure, not in this 'clusterfuck of biblical' situation.



Wed, 03/16/2011 - 17:15 | 1063191 Blorf
Blorf's picture

77.59... sweet jesus

Wed, 03/16/2011 - 17:21 | 1063233 A Man without Q...
A Man without Qualities's picture

76.29 just flashed up - this is insane

Wed, 03/16/2011 - 17:17 | 1063205 alien-IQ
alien-IQ's picture

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!

Wed, 03/16/2011 - 17:18 | 1063208 Cursive
Cursive's picture

The people of Iceland are laughing.

Wed, 03/16/2011 - 17:28 | 1063313 John McCloy
John McCloy's picture


Wed, 03/16/2011 - 18:05 | 1063549 EscapeKey
EscapeKey's picture

WTF does Kerry Katona have to do with it?

Wed, 03/16/2011 - 18:20 | 1063647 IQ 145
IQ 145's picture

 ha. ha. very likely.

Wed, 03/16/2011 - 17:17 | 1063211 smeagol
smeagol's picture


Wed, 03/16/2011 - 17:21 | 1063249 alien-IQ
alien-IQ's picture

tried that. found myself a few thousand dollars poorer in a fuckin nanosecond. OUCH!!!!!

Wed, 03/16/2011 - 17:19 | 1063218 Yen Cross
Yen Cross's picture

I'm as flat as the Devil crawling under a rattle snake.

Wed, 03/16/2011 - 17:18 | 1063220 equity_momo
equity_momo's picture

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.

Wed, 03/16/2011 - 17:18 | 1063221 alien-IQ
alien-IQ's picture

still going...fuck me. there has got to be a bounce in here somewhere...but right now OMFG!!!!

Wed, 03/16/2011 - 17:18 | 1063223 homersimpson
homersimpson's picture

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?

Wed, 03/16/2011 - 17:23 | 1063261 A Man without Q...
A Man without Qualities's picture

It's not dropping....

Wed, 03/16/2011 - 17:24 | 1063270 hedgeless_horseman
hedgeless_horseman's picture

The USD is crashing versus the Yen.  You are backwards Homer.

Wed, 03/16/2011 - 17:29 | 1063320 homersimpson
homersimpson's picture

Thank you for setting the record straight for the above replies..

Wed, 03/16/2011 - 17:20 | 1063229 economessed
economessed's picture

76 mothra forkin 59?

Wed, 03/16/2011 - 17:22 | 1063232 hedgeless_horseman
hedgeless_horseman's picture

77.  Chinese kicking the Japanese while they are down?

Wed, 03/16/2011 - 17:20 | 1063243 jesse livermoore
jesse livermoore's picture

what is the yen carry trade ?   any explanation appriciated

Wed, 03/16/2011 - 17:28 | 1063317 Dragline
Dragline's picture

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.

Wed, 03/16/2011 - 17:30 | 1063329 Everybodys All ...
Everybodys All American's picture

Simplest form ... borrow money in the form of yen and buy stock in dollars.

Wed, 03/16/2011 - 19:43 | 1064025 Yen Cross
Yen Cross's picture

Learn to spell and we will exponiate!

Wed, 03/16/2011 - 17:22 | 1063267 Sutton
Sutton's picture

Bloomberg 6 weeks ago had Japanese housewives record short yen; long Aud, Cad, New Z.

Wed, 03/16/2011 - 18:21 | 1063662 IQ 145
IQ 145's picture

 Gonna be a whole lotta totally screwed Japanese housewives; in manner of speaking.

Wed, 03/16/2011 - 20:07 | 1064121 Yen Cross
Yen Cross's picture

The yen MoMs? Loook@ CFTC charts . or go to the TFCE. Tokyo Financial Exchange.

Wed, 03/16/2011 - 17:25 | 1063287 vitoox
vitoox's picture

Any BTFD Mantra Munchers outa here?

Wed, 03/16/2011 - 17:24 | 1063289 Everybodys All ...
Everybodys All American's picture

CNBC fella is making a strong case for a weaker yen.

Wed, 03/16/2011 - 17:29 | 1063318 mick
mick's picture

Benny-San know print plenty Benny-Yenny. Tora Tora Tora, Benny-San-Yankee.

Wed, 03/16/2011 - 19:53 | 1064077 Yen Cross
Yen Cross's picture


Wed, 03/16/2011 - 19:56 | 1064087 Yen Cross
Yen Cross's picture

Kool fACE PLATE. NIiCe work! Mr. Slate is on it.

Wed, 03/16/2011 - 17:31 | 1063337 konputa
konputa's picture

Holy shit, have you seen EUR-USD in the last 20 minutes?

Wed, 03/16/2011 - 17:36 | 1063374 smeagol
smeagol's picture

crazy moves, get scalping

Wed, 03/16/2011 - 17:52 | 1063460 konputa
konputa's picture

There's nothing like a near instantaneous 60 pip move to wake you up.

Wed, 03/16/2011 - 19:44 | 1064032 Yen Cross
Yen Cross's picture

I'm square.

Wed, 03/16/2011 - 17:32 | 1063342 equity_momo
equity_momo's picture

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.

Wed, 03/16/2011 - 17:34 | 1063354 smeagol
smeagol's picture

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

Wed, 03/16/2011 - 17:35 | 1063373 scratch_and_sniff
scratch_and_sniff's picture

carry traders? ...clean out!

Wed, 03/16/2011 - 17:44 | 1063423 e_goldstein
e_goldstein's picture

BOJ hasn't intervened because the filthy bankstas probably left town.

Wed, 03/16/2011 - 18:29 | 1063708 greenfire
greenfire's picture

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.

Wed, 03/16/2011 - 17:51 | 1063456 blazen
blazen's picture

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)?


Wed, 03/16/2011 - 17:54 | 1063467 malikai
malikai's picture

Looks like they are intervening now.

Wed, 03/16/2011 - 17:57 | 1063489 jbc77
jbc77's picture

usd/ going apeshit!! I'm speechless. There is no way the Nikkei opens. 77.34 and dropping...

Wed, 03/16/2011 - 18:05 | 1063554 cheesewizz
cheesewizz's picture

 The big bags of rice were almost gone...

Wed, 03/16/2011 - 18:40 | 1063772 gerriek
gerriek's picture

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.

Wed, 03/16/2011 - 19:52 | 1064061 Yen Cross
Yen Cross's picture

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?

Wed, 03/16/2011 - 20:08 | 1064127 Yen Cross
Yen Cross's picture

I have a trade to make. Just one. EUR/JPY! Whoop ass all.

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