I have been short the yen since November 2009, but today, I'm closing the directional position (although we're still short yen against Japanese equities). This was a portfolio decisions, rather than a directional decision.
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G-Pap and Berlusconi are having some bad days, but do they know how to count to a quadrillion? Monday morning,
Marketwatch reported:
Japan's debt to exceed 1 quadrillion yen: report
HONG KONG (MarketWatch) -- Japan's national debt is on track to exceed 1 quadrillion yen ($12.8 trillion) by the end of the fiscal year next March, with the debt rising faster than Ministry of Finance forecasts because of spending tied to aid and rebuilding from the devastating earthquake and tsunami earlier this year, according to a report Monday in the Nikkei newspaper.
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While Fed minutes, housing numbers, etc. are all important, it's important for investors to look around the world at stories that will impact their investments.
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Some pains are sharp and localized. They require a quick decision, but mostly, they're easy to work through because we can be confident that they'll pass. The headache that comes on quickly at work at 3:30 in the afternoon is usually bad, but after the first few times, it stops worrying us.
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Why would China bid up the yen? The short answer is I’m not sure.
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G3 Currencies
I’ll say it: G3 currencies are not making sense. Forget about irrational, or momentum, or fundamental, or whatever. There appears to be almost no underlying logic in some of the recent moves exhibited by the major currencies.
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...or yen and euro. Long time readers know that I have maintained short exposure to both the yen and euro starting in November of 2009 - pretty long by currency traders perspective.
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For those with long enough memories, the current currency wagging the markets is reminscent of 1987. There, I said it. Portugal gets downgraded. Ireland is gonna haircut every debt holder. Etc.
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What happened to all those repatriation of yen will end the dollar stories I kept getting last week? Turns out that a natural disaster is no match for demographics in this case.
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The dollar is once again the most hated reserve currency in the world. European peripherals are breaking down, with bonds hitting all-time high yields in Portugal, Ireland, Spain and soon others. The yen is getting printed so fast we should have bought printing presses in anticipation.
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And right now, there's one asset that looks pretty ugly...
What if I told you there was an asset that was sitting at 52-week lows. It has some negative fundamentals, and a few relative positives, but no foreseeable absolute positives.
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As readers know, I have had exposure to Japanese equities, currency hedged, for the past year. That position has been difficult at times, especially since the yen's strength confounded me.
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Japan is off 11%, and the yen is stronger - I guess that's what happens when a natural disaster moves a country 8 feet over and brings it to the bring of nuclear meltdown.
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The Japanese stock market is hitting circuit breakers with a 5% drop as Japanese officials scramble to inject liquidity into the system.
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The world is worried about oil, and rightfully so. The Middle East is in turmoil - I get it.
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Currency | | 
November 30, 2011 4:16 pm | 
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