The October-December squeeze in the Yen was an output of one of the great levered long investor unwinds – the Yen carry trade. This also occurred in the time period of global asset class rotation where the safety of cash became king. Now that both the US and Japanese governments are cutting interest rates to zero, it inspires the capitalist in me to hold less and less of a currency that earns no rate of return on my hard earned savings.
As the “liquidity crisis” continues to burn itself away from consensus, look for both the US Dollar and the Yen to underperform as they have been doing for the last month.
We remain short the US$ via the UUP etf.
Keith R. McCullough
CEO & Chief Investment Officer