Carry Trade - Yen and Swiss Franc: Relation to markets....




Carry Trade and US markets: Really all that matters...Note the DOW chart for ONE REASON - INVERSE RELATIONSHIP, look what happened to the stock markets back in May when these currencys moved upward. Also note that rise in November, again a reaction in the DOW. The markets anticipated the end of the carry trade and reacted! Then note what happened to the markets once they reversed. This is our investment key for 2007 or at least one of the big ones. -stay invested as long as these stay low, run for dodge on any signs of an upward reversal.
-chart the Yen and Swiss Franc, if they move up and breakout to the upside be careful long the market.
-right now as of today, both are oversold and ready to move up - watch that.

""A key driver of the excess liquidity has been the continued exploitation of the carry trade, in the face of rising rates by Federal Reserve and ECB"".......this is all that matters.

The carry trade is mostly Yen but also they are using the Swiss Currency.

This week:
-Borrow Yen for three months at 0.55%
-Borrow Swissie 2.10%

This week:Invest in....
--Europe 3.5% yield
--US 5.3% yield
--Australia 6.5% yield
--Iceland 15%
--Turkey 19 %
we could go on - you wonder why the Turkish market has skyrocketed........

--note this statisticHungarian homeowners in the second quarter of 2006, 74% of all mortgage refi's by the top bank were dominated in foreign currency, primarily Swiss Francs!

--Most of the carry trade is with borrowed money!

The Yes and Swissie hold keys to the market and your portfolio health .The CBs are fueling asset bubbles in every asset class including global property booms, art and whatever else speculators are chasing.

West