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Yen Breaks 102 Focal Point
As we already noted earlier today in our overnight recap "Alarms Going Off As 102 Dollar-Yen Support Breached", all eyes are glued on the USDJPY 102, which moments ago decisively breached the 102 support level. We said that "if support below the USDJPY fail solidly, then watch out below." Sure enough, here is Ben Hunt from Epsilon Theory with some follow up observations on this topic.
There was a clear short-term narrative developed in the financial media last week creating a focal point at 102 in the Yen/USD exchange rate. The short-Yen trade is perhaps the most crowded trade in the world right now, so a strengthening of the Yen to break below the focal point is a big deal for market game-playing behavior. The Yen broke below 102 today, which will put plenty of game-playing pressure on levered short-Yen positions in particular, and the entire equity market in general. Be careful out there.
Untaper time yet?
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Someone(s) forcing the FED to admit they are one trick pony and exposing them as a naked emperor for all to see instead of being able to hide the faux untaper to the stock market by playing 3 card monti ball under the shell game using abenomics and the USD/JPY as the red ball?
This is what happens when outsource everything including money printing.
Outsourcing the greatest evil ever created to undermine freedom in general... Outsourcing is the tool for dependency in general.
Fear not the yen and place your trust in k-hen.
To DCH's point above, I concur, whole heartedly. Rvryone except the one's in control lose...
http://aadivaahan.wordpress.com/2011/03/01/on-outsourcing-and-its-ills/
ori
Dewey it's funny I see it the other way. Yellen seems intent on making us beg. A potentially very bad move.
The Fed is officially boxed in.....they are trying to get the 10 yr below 3% with all its efforts but the side effects is that the markets will crap with it.....if they want the markets to go up...well watch the 10 year go back to 3% again....the little leeway that they had is now gone. Markets will trade sideways at best....
No this is all smoke and mirrors. The only people being denied 20B in FED taper is the global market. The US stock market isn't being denied 20B in flow by the FED taper it was just redirected off of Abenomics into the US stock market. If anything the FED is sticking the global market by about ~40B by redirecting that additional 20B. Follow the volatility. Where is the most volatility? Where is it least? How volatile was it where it is most and least now before the taper? How did each markets move before the taper and how are they moving now and at what rate in comparison to each other in both cases?
Look at it from a junkie detoxing standpoint. FED cuts back the herion global market is acting like a junkie in withdrawal while the patient they tapered back the drip isn't. Only other major heroin drip is Japan who happens to be pretty much a corpse and all that heroin isn't going to revive a dead corpse so it means that drip is really just leaking out into the global market as the corpse hits it's saturation point. So if the patient the FED tapered back from is absorbing more of that drip from Japan at the expense of the global market. Both are acting accordingly so is Japan by not flinching while their stock market drains of heroin.
Basically the pyschological effect is full taper withdrawal for the global market while the US stock market is pyschological full taper withdrawal (20B now) but the physiological effect to the US stock market is isn't full taper withdrawal (somewhere less than 20B) while the global market the physiological effect is the full 20B plus whatever else is being diverted from Abenomics. They are using Austrian economic principles of markets being driven by human pyschology to taper back without admitting it.
The whole game blows up if Abenomics shuts off the money press or someone else manages outmaneuver the FED on the USDJPY trade now. There are no other printing presses to turn to except for the Chinese. ECB isn't going to prop up this mess since they won't print to oblivion in the first place. There really are no other banks big enough to that aren't BRICS to pick up the slack anymore.
They're actually a two-trick pony now. It will be interesting to see whether they stay that way long-term (i.e. beyond maturity of the bonds they now hold) or whether they revert to being a one-trick pony. I think there's a good chance the Fed will become a regular participant on both the buy- and sell-side in the bond market.
Yeah, come down here, I dare you. ;-)
All fiat goes to zero at somepoint on the timeline...
The trick is to pin today to the timeline.
DaddyO
"Be careful out there."
You simply can not pay too much for this kind of advice.
you could buy gold or silver to protect yourself against the curency rumble :)
OK, I spat on this call earlier, so now I'm eating my hat.
Anyone still BTFD ?
Thought not.
Correct me if I'm wrong, but in the absence of a larger, parallel move by the Bank of Japan, wouldn't untapering simply strengthen the yen further?
Untapering should actually make the Yen weaker. The recent strength is due to a bit of carry unwind and not so dovish comments by the BOJ.
All IMO.
I think the idea is that what's been pushing the S&P ramp up has been the USDJPY carry trade. Now that's going away, the fuel has to come from moar QE.
Thank you both, GT & P, for your civil discourse.
This would not push the Fed to "untaper". If anything, this might push them to taper a bit more.
please elaborate on that if you don't mind.
ah ohh spaggehtti oh....
Get back here and turn those untapering machines back on!
it will breah the 101 level very shortly as well.
nikkei futures down 540 .
awesome stuff
C'mon shit, the fan is just over here...