There has been a major dislocation in the FX markets in recent weeks. Ask our currency expert, Forex Kong.
The result of these disruptions have led to lower stocks in Asia, flat in the US, however. There is a lot of fear, stemming from Thailand to Turkey. Yet, US markets have been blowing marijuana smoke in the faces of prognosticators.
A very interesting trend, that has be in place for more than 2 years now, is the brutal bear in commodities. Jim “the bowed tie” Rogers is completely without penis now, lollygagging like an idiot in the orient–teaching his spoiled brats mandarin.
There isn’t money to be made in corn, even though central banks are printing money ad nauseum. Why is that? Everyone has so much money, shouldn’t they be buying farms?
I don’t know how we got hoodwinked into believing the inflation myth. There isn’t wage inflation, just the asset variety. The money that is being made available by the fed is being used to purchase stocks and real estate, evidenced by the facts.
Coffee is down 60% over the past two years.
Natural gas is down almost 60%.
Coal and uranium are off by more than 45%.
Silver, lithium, nickel, sugar, cotton, copper and cocoa are all down more than 25%.
These aren’t corrections, but annihilations.
The above chart is of the yen. It is the cog that keeps the risk train rolling. Banks borrow yen to buy assets. When the yen goes lower and the asset they’ve purchased rises, they make money. However, if the yen starts to go up while assets are flat to down, forced sales happen. This is a very simple explanation of how the yen carry trade might hurt global markets. It’s real. Be scared of it.
Overall, currencies have been all over the place, with most of the strength found in two risk off currencies: Swiss Francs and Japanese Yen.
In my opinion, the commodity trade isn’t coming back. It can be traded; but forget about CLF hitting all time highs again. US markets will continue to rise, if housing keeps its upward trajectory and the Fed and Bank of Japan keep reflating. We can survive without the Fed and BOJ, but there will be a period of adjustment, which means stocks will trade lower. Eventually, we’ll get off the Fed’s crackpipe, but only after employment has improved.
They told you 6.5% is their mark. Why don’t you believe them?
Buy the dips, unless the yen carry trade unravels. If that happens, buy VXX in size.