Carry Trade Unwinding

What a memorable day of Sept 11, 2008. I saw the whole world is crying, shedding red tears on their equities board. Then I remember I saw Jim Rogers on the Bloomberg TV, this out-spoken old man saying he is taking advantage of the victim of carry trade.

Then I ran some charts on Japanese Yen against some high yield currencies like New Zealand, Australia and Euros. This is clearly an unwinding of trade carry that ripples through the equities market. When New Zealand central bank cut 0.5% to ward off recession, this triggered and confirmed the global economy slowdown. This will diminish growth gap between the rest of the world and the US or Japan. They are rushing to sell high yield currencies and repay their Japanese loan.





The market is the process of pricing a global slow-down. I am not sure what will be the next thing that the market needs to re-price. I think you may notice my tone has changed considerably compared to beginning of the year. I got many of the things right and luckily did not put in more money after June. This has saved me a lot of money realizing I don't have to do too many smart things but to avoid doing stupid things. Have a nice weekend.