Credit Suisse Reveals The Next "Pain Trade"

Tyler Durden's picture


First there was "long social-media", then "short bonds", and now - as Credit Suisse notes - the next "pain trade" appears to be building in USDJPY (which is very worrisome for broad risk assets in general).


Credit Suisse - The next "pain trade" ?

As we have highlighted on several occasions, one of the reasons we have been looking for lower US yields (besides a yield top for 5yr5yr US and rising US Duration Risk Appetite) has been positioning and the "pain trade", and we believe we may well have the same conditions in USDJPY.

Here, the market continues to weigh heavily on a cluster of pivotal supports at 101.23/100.75 – the repeated series of lows for the year from February, March and April, the rising 200-day average and the 38.2% retracement of the June-13/January-14 uptrend. A break below here, which we think increasingly likely, would see a top, warning of a potentially aggressive move lower.

Below 100.75 (and probably now 101.20) would see a top confirmed to target 99.63 initially, ahead of the 61.8% retracement of the rally from last June at 98.25. While we would look for this latter level to hold at first, a break in due course can target 96.57, and eventually 94.65 – the 38.2% retracement of the entire rally from September 2012.

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Mon, 05/19/2014 - 14:46 | 4774644 carbonmutant
carbonmutant's picture

USD/JPY has been in a DOWN channel since January...

Mon, 05/19/2014 - 14:55 | 4774666 El Oregonian
El Oregonian's picture

New Motto: "All Pain-No Gain!"

Mon, 05/19/2014 - 15:08 | 4774703 CrashisOptimistic
CrashisOptimistic's picture

They import 5 million barrels per day priced at $108 Brent.

That's $540 million leaving the country.  If the yen strengthens then that money flowing out is fewer yen drained from GDP.

As for them desiring a weak yen, the Fed has no reason to let Toyota destroy Ford.

Mon, 05/19/2014 - 14:46 | 4774646 101 years and c...
101 years and counting's picture

i cant wait for the first TBTF hedge fund....i mean recommend shorting their own stock.

Mon, 05/19/2014 - 15:56 | 4774833 ArkansasAngie
ArkansasAngie's picture

I'd say a 30% discount for bank capital by D over the weekend qualifies.

Mon, 05/19/2014 - 14:48 | 4774653 Grande Tetons
Grande Tetons's picture

USD/JPY going toward 80....reminds of somehting a wise old sage once said.

Mon, 05/19/2014 - 17:44 | 4775115 hairball48
hairball48's picture

Yen to 80? I really doubt that.

Japan is fucked. Aging population, increasing energy costs, general lack of competiveness, are just a few of their many problems. And, by a long shot, we haven't heard the last from the Fukushima disaster.

The Yen was over 300 when I was last there :) I'm thinking it'll get there again.

Mon, 05/19/2014 - 14:49 | 4774655 fonzannoon
fonzannoon's picture

this is also known as the "hahaha f u kyle bass" trade

Mon, 05/19/2014 - 15:09 | 4774705 disabledvet
disabledvet's picture

Yeah, no shirt.

While the recovery still has yet to materialize the "pain trade" has been anything but going on 5 years now.

Sounds like good tactical advice...still getting stopped out of a short position is the Sum of All Fears?...but as with everything else dealing with the future "it is uncertain."

Mon, 05/19/2014 - 14:51 | 4774659 Stoploss
Stoploss's picture

Hey, look. Gold is pretty low right now.

Goldman buying yet?

Mon, 05/19/2014 - 14:57 | 4774679 FieldingMellish
FieldingMellish's picture

Gold is coiling.... which way will the spring pop?

Mon, 05/19/2014 - 14:55 | 4774672 AccreditedEYE
AccreditedEYE's picture

Soooo... buy USDJPY. Gotcha.

Mon, 05/19/2014 - 15:00 | 4774687 junction
junction's picture

I wonder why Credit Suisse would suddenly decide to tell the truth about the crummy economic situation the US is facing?  Maybe the multi-billion dollar extortion fee the Swiss bank will be paying the Feds to continue doing business in the USA, huh?

Mon, 05/19/2014 - 15:01 | 4774689 BoingBoing
BoingBoing's picture

I don't get it - why would the JPY strengthen against the USD? Abenomics are a failure, but is this saying that the fed's QE is an even bigger failure?

Mon, 05/19/2014 - 15:05 | 4774699 FieldingMellish
FieldingMellish's picture

As Japanese investors leave the stock market, demand for local cash (Yen) soars. They may want to consider harder assets, however, as further protection.

Mon, 05/19/2014 - 15:11 | 4774706 Grande Tetons
Grande Tetons's picture

When you close a long USD/JPY are effectively buying Yen.  That is, no more Abe stimulus...will cause a lot of the Yen shorts to take profits.  But, hey what the fuck do I know. 

Mon, 05/19/2014 - 15:57 | 4774842 ArkansasAngie
ArkansasAngie's picture

WHy in heck would I want to bet that Abe stops printing?

If he does, I'm going to want my money local.

Mon, 05/19/2014 - 16:38 | 4774955 Iam Yue2
Iam Yue2's picture

Ha Ha: The Next Pain Trade!

"U.S. Files Criminal Case Against Credit Suisse in Federal Court."

Mon, 05/19/2014 - 17:07 | 4775024 Cacete de Ouro
Cacete de Ouro's picture

In 2000 Credit Suisse bought one of the gold fix seats and then less than 2 years later they bailed out and sold the seat again to SocGen. What was all that about? That was one of the shortest seat participations ever. In fact, the shortest.

Why would one of the big Swiss banks get in and then leave, unless it was an intel reconnaissance exercise from start to finish, which is my pet theory.

But why not stay in deep undercover?

Or else the French wanted in and the Banque de France did a side deal with the Swiss National Bank on behalf of SocGen and Credit Suisse respectively, to trade the seat. This would make sense if SocGen had got in to central banking gold lending in a significant way and needed to keep the value of their exposure in check.

Tue, 05/20/2014 - 03:06 | 4776437 SoDamnMad
SoDamnMad's picture

2000 was a hell of a long time ago. So why was the gold hanky-panky going on then?

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