Yen carry and US stock market in deep doo-doo

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The following is from a sight called www.stocksite.com and an money manager named Bill Fleckenstein. This guy's quite good. I read his market wrap daily and today I kept seeing the dollar getting pounded and pounded.....As the yen drops so does the urge to invest Japanese money in the US markets. As the yen drops so does the profits from the carry trade which is invested in US Markets. Helloooooo out there. There were also rumours amoungst the currency markets that the Japenese are repatriating Yen primarily to increase YEAR END LIQUIDITY. Yikes. for educational and research purposes only.... -------------------------------------------- Dollar crushed... Overnight, there was a story - thank you, Joanie - that Mr. Sakakibara, a.k.a. Mr. Yen, supposedly said that the dollar-yen could go to 1.10 as long as the Nikkei was rallying and the MOF wouldn't get bent out of shape. So in the early going, the dollar got whacked for a couple of percent. It had a bit of a bounce but it was kind of feeble, and the dollar wound up closing on its lows of 111.80.

In the "no adults home" department... Right in the middle of the dollar collapsing this morning, the Fed came out and did a coupon pass, pouring liquidity into a market that is obviously already suffering from too much liquidity. So it just goes to show you that these guys are completely and totally without concerns about any potential dollar-yen problems. One of my long-held beliefs is that ultimately the dollar would be confetti and we're going to know pretty soon whether we're starting to see something serious or whether we're getting more noise.

Trade numbers tomorrow... Tomorrow we'll see the trade deficit report and it probably won't be a good number. But then again, it's massaged to death, too, so who knows how that is going to turn out? After they massage it and take out this, that and the other thing, like they do on the CPI and all the other reports, who knows how the number will be described? We'll have to see if there's going to be a larger move in the currency on the back of that, and if the authorities are going to try to come in and spring a trap somewhere

-- Gordon (g_gecko_69@hotmail.com), August 18, 1999

Answers

Well gee, one agency of the government is doing something nefarious (increasing liquidity at any cost ultimately causing inflation), while another agency covers their butts by posting "massaged" numbers to keep everybody happy.

Keep the plates spinning at the cost of future economic problems. All the bankers will be ok, just us "po folks" who get it in the neck.

Jolly

-- Jollyprez (jolly@prez.com), August 18, 1999.


I am quite frankly incensed by how figures are being reworked every day of the week for the sake of keeping the investors grinning and covering the a**es of hedge funds. Can people not see the prices going up every time they shop? And yet inflation doesn't "officially" exist. LOOKING FOR CLUES ???!!! Don't expect the big guys to be soiling themselves in the coming chaos. They'll have their money somewhere else, while they're shooting craps with yours....

-- Gia (laureltree7@hotmail.com), August 18, 1999.

Gordon,

Good point on the yen v. dollar. On another post, I think Andy postulated that Yen-Dollar-Euro could trade at near parity as a global currency. In that event I would not be surprised to see a cashless system with everyone issued a smart card that tracks your available assets and deducts expenses as they are incurred.

Even without Y2K I believe the current financial system is in for a severe shakedown. With Y2K, the computer problems can only make a bad global finance situation worse. For the conspiracy minded Y2K could ne a great cover for serious financial shennanigans (like shorting gold to buy Swiss francs or oil futures and using Y2K as a cover to avoid responsibility for a financial crisis).

-- Bill P (porterwn@one.net), August 18, 1999.


Gordon,

When you wrote "as the yen drops", I presume you meant either "as the dollar drops" or "as the yen climbs", or some such.

Jerry

-- Jerry B (skeptic76@erols.com), August 19, 1999.


Yeah, I was puzzled as well by the "yen drops" comment. The yen is rising at rates alarming to the Japanese Finance Ministry. The end-point of all global monetary machinations is clear: a global currency unit, with global trade governance organizations calling the shots (the organizations already exist, of course: the International Bank for Settlements, the IMF, the World Bank, and all the GATT, NAFTA, Bretton Woods governance agencies). All signs point toward monetary convergence for the trilateral industrial blocs. The Mobil 'Speedpass' will eventually morph into a global 'UniCash' card, perhaps implantable for convenience and safety. But always remember the Robert Burns tag: "The best laid plans of mice and men aft gang agley."

-- Spidey (in@jam.commie), August 19, 1999.


A relatively young, Mr. Sakakibara, was put out to pasture.

The former Treasury Under-Secretary (now Secretary) is acting differently, now that the buck stops with him. Intervention has been slow, but I certainly expect it tomorrow (August 20, 1999). I don't think this delay has been good for anyone except (I talked about it 3 weeks ago) - hedge funds.

-- PNG (Peter Gauthier) (png@gol.com), August 19, 1999.


AMEN Gia,

My grocery bill gets larger every month. Gas is up 50 cents a gallon in the past two months. All utility bills are up. Cable TV is up.Taxes go up every year. This crap about no inflation is ridiculous.

-- anti-chainsaw (tree@hugger.com), August 19, 1999.


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