Is the Carry-Trade done??

Its possible that some bad unwiding takes place. If you're short yen and long end of the interest rate curve around the world watch out.
 
I was hoping for some confirmation from the yen today but we ddin't even take out yesterdays high. Hopefully we will get some follow through in the selling tomorrow and the yen will start to confirm that this isn't just another dip. Forget the vix as a measure of perceived risk, the yen is where it is at.

Whats funny is that even if we get a 10% correction we will just be back levels we were at in mid April. However given the increase in leverage I think that if we lose 10% it won't stop there. LOL yes I'm short.
 
Quote from Mvic:

I was hoping for some confirmation from the yen today but we ddin't even take out yesterdays high. Hopefully we will get some follow through in the selling tomorrow and the yen will start to confirm that this isn't just another dip. Forget the vix as a measure of perceived risk, the yen is where it is at.

Whats funny is that even if we get a 10% correction we will just be back levels we were at in mid April. However given the increase in leverage I think that if we lose 10% it won't stop there. LOL yes I'm short.
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lol. maybe you want ot tell us why stocks would go more than 10% down....because you are short?:D
 
I did, its because of the leverage that has been poured on since April (remember that was when the new portfolio margin rules took effect). A 10% correction with the amount of leverage that is in play right now could potentially cause a liquidity crunch that reverberates throughout the financial house of cards. Not saying it will happen or giving any odds on it but I think that some big funds are were caught the wrong way and started chasing returns in April and it is that type of scenario that has the potential to cause a more dramatic sell off than we might otherwise have had. Certainly at some level liquidity becomes and issue and it begets more selling, is a 10% correction in equities with oil moving up sharpish and bond spreads widening hitting those famously leveraged spread trades along the length of the yield curve (and liquidity being squeezed by rate hikes by other CBs) enough to do it? Who knows but with the amount of leverage being employed its is at least something that can be reasonably considered.
 
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