The sharp rise in the JPY/USD is causing a massive unwind of Yen carry trade positions and contributing to the sharp decline in US stocks. For those who do not understand how this works, a brief explanation
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Many traders were borrowing Jap Yen (JPY) at low interest rates, converted them to USD and used this to buy US stocks
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Now that the Bank of Japan (BOJ) is raising interest rates, the JPY has strengthened significantly against the USD.
Now, these traders are in big shit. Not only must they pay higher interest for the JPY they borrowed, they are now facing huge forex losses as well. The USD assets they are holding may not be enough to repay the JPY they have borrowed.
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This is causing a huge unwind of these trade positions. Traders facing big losses and margin calls are selling their US stocks to raise USD, converting back to JPY and paying back their loans.
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This can lead to more selling pressure on US stocks and even more declines in the short term. Middle east war escalation, US political uncertainty is also adding to the fear and panic.
A tldr of what‘s been happening on the market.
byu/theknowndudereturns inwallstreetbets
Posted by theknowndudereturns
44 Comments
Ohhhh… so this is on top of the “recession news” last week. Dammit all crisis start with multiple bullshit exploding at the same time.
There have been so many indicators of a crash in the last few weeks, we’ve been in a massive bubble, this is absolutely not solely on Japan
But now the rains weep o’er his hall
And not a soul to hear
yall think its better to Market sell at open for -10% or wait a bit for the price to hit -5% to sell?
It’s a blip, don’t be fooled. It’ll last a week or two. Buy the dip, the whales sure will. Thats why buffet has stock pilled all this cash, he’s gonna time the market and you pu$$ies are gonna lose out again by being afraid
https://preview.redd.it/j9gsoifeotgd1.jpeg?width=811&format=pjpg&auto=webp&s=4316e6378052cf58f3cd854452c968b954ed0810
Man, I graduated high school in 2008 with the recession in full swing and it traumatized the hell out of me. The area I lived in got absolutely decimated and you couldn’t even get a job at places like Walmart. It took me like 6 months just to get a job as a dishwasher at a fucking Ruby Tuesday back then. I’m terrified of going through that again with a kid of my own.
As a tiny little retail investor with a 401k and IRA, this makes me feel like a leaf being carried along by a raging river. There are forces far beyond what I can see or understand affecting the markets. All I can do is hang on and hope the big players move the markets upward over the long term and I get to go along for the ride.
So what you’re saying is… buy the dip, sell everything, the end is nigh,it’s only a loss if you sell, buy high, sell low and show us your screenshots?
I wish I could read, but nice post 👍🏻
So did anyone short the Yen heavily, better than puts on QQQ and SPY today?
Reminds me of Liz truss business plan that was donks, and her former financial company had heavily shorted the pound next day and made fuck tons.
“Your Clothes. Give Them To Me. Now”
-The Terminator
Im going to japan next month. I need the yen to be weak AF
Why didn’t people do that with Turkish Lira?
Apple -10% today
So did these loans have adjustable rates or something?
Green by 10:30 (Tom Lee probably)
OK, so DXY is going to rebound like a mfkr shortly?
should i sell my index fund that is in profit rn?
There’s been plenty of movement of this magnitude in the JPN/USD over the years yet it was never responsible for something like this. The true explanation is the most overpriced bubble in history is finally popping
Yawn.
LMK when those circuit breakers start poppin
Could have at least credited the tweet you stole this from ![img](emote|t5_2th52|4640)
https://preview.redd.it/negmeaflytgd1.jpeg?width=885&format=pjpg&auto=webp&s=1f0cd01e3e6b1c1f0a10028d91d17eb91325e388
I’ve been in the red for over a year now. This is just another day in the office lol. Speaking of office, y’all know if Wendy’s is still hiring?
#The Yen Carry
>!deez nuttz in yo 👄!<
https://preview.redd.it/fzyda26vztgd1.jpeg?width=1125&format=pjpg&auto=webp&s=59bfb68da858219c17d565034bc193059aa7a3cf
I don’t get why BOJ raised rates all of a sudden. Didn’t they want inflation? Their economy has been deflating for decades.
BANN
Too smart for WSB tbh
Big institutional investors buttfudging the everyman to pay for cocktails on their G5s.
“The Japanese did this”
So Japanese monetary policy was causing stocks to inflate in the US? This is some real degenerate shit
Or diamond balls?
“many traders” were not so smart right?
Really well explained. Also unemployment uptick last week and news of Warren selling half his Apple stake adds a bit more fear too. Though the impact of the carry trade is probably more direct
We were betrayed by our allies
![img](emote|t5_2th52|12787)
https://preview.redd.it/yq46iv3f5ugd1.jpeg?width=1179&format=pjpg&auto=webp&s=20744eedab58d1cb6a192cbbdf19d42bce1dbdd2
I’ll wait until the sp500 falls below the 200 day moving average to panic. If it does, then we probably head lower
Conveniently, no one has heard anything about this until it becomes a complete shit show
The Japanese Government gross size of its balance sheet is $20 trillion or 505% of Japanese GDP!
In other words, Japan’s government is engaged in a GIANT $20 trillion „carry trade“ – the funding of loans and foreign assets by borrowing low-cost yen.
https://preview.redd.it/akc5xu206ugd1.jpeg?width=1260&format=pjpg&auto=webp&s=2b0bba8e1b2c015795720a23838471dcb90704a8
[source](https://x.com/globalmktobserv/status/1820357077077721452?s=46&t=UIfYH74Mf3Tnee02OQ5cTg)
So what’s the play?
Basically it’s a BIG buying opportunity
Is there any concrete numbers on how much money has been borrowed that potentially has to unwind now?
Thank the lord, 2nd chance to get stocks cheap