ShareNouriel Roubini seems to think so. In remarks quoted via Bloomberg, he called the enormous increase in asset prices “the mother of all carry trades.”
Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the [...]

ShareOne other reason to sell the dollar is interest rates.  Why not borrow in dollars where interest rates are low and invest elsewhere where yields are high?  This is what is known as the carry trade.
In the past decade, the Japanese yen and the Swiss franc were favorites for the carry trade because of their [...]

In economic circles, there has been a lot of buzz about Quantitative Easing of late. Basically, the U.S. Federal Reserve has lowered interest rates to near zero percent and the fear is that these cuts will not have enough effect on the willingness to lend in order to reflate the U.S. economy. Therefore, the Fed has decided to take more draconian measures, one of which is Quantitative Easing, flooding the economy with money.

ShareLast night an article by Niels Jensen of Absolute Return Partners caught my eye. In it, he made a very strong case for worrying about European bank exposure to emerging markets and its potential for creating systemic risk. I would like to share some highlights from this well-written piece and add a few [...]

ShareBy now, you are familiar with the carry trade, where one borrows in one’s own currency in order to invest in higher yielding foreign assets, often times with significant leverage. The Japanese were famous for making this trade in Australian Dollars, U.S. Dollars, you name it.
What a lot of people don’t realize that everyone [...]

ShareJust as Japan is starting to unwind its carry trade, a new one might be forming in the form of 1% base rates in the United States. The carry trade was very popular amongst Japanese retail investors, especially using leverage (see article – hat tip Yves Smith). But, this trade unwound in a [...]

ShareOf the major currencies, the Japanese Yen has been the strongest in the last few months, while the Australian Dollar has been the weakest. These two currencies have also been the most conspicuous in the Japanese carry trade. That trade is now coming unstuck, precipitating changes of epic proportions.
For those of you who [...]

Although off its highs for the day, the Japanese Yen is still looking very strong against every major currency. Earlier, it pushed as high as 92 yen to the dollar. Jim Rogers was on Bloomberg saying it was headed much higher.

Something dramatic is happening in the currency markets. I commented on this in my post “US Dollar rising dramatically.” These currency moves are related to international dollar debt, the carry trade unwind and expected interest rate cuts due to slow growth.

ShareThe U.S. Dollar is rising once again. As the realization kicks in that the U.S. will not be alone in its economic struggles, currency traders are making major bets that interest rates will fall outside of the U.S. across the board. The British Pound, the Euro and the Canadian Dollar have all been [...]