Will China's 1/2% rate hike affect the carry trade?

T

thriftybob

Odd that they'd announce it on a Sunday to me, but maybe its Monday there already.

Makes you wonder where the carry trade money is invested at the moment. It must still be in there because world markets at all at highs.

At some point the fearless margin money and carry trade money will decide its time to take the cookies off the table, but when? And what will be the trigger?

Making profits doesn't do any good if you never cash them out until the parabolic goes down the other side, and I have to figure these positions must be huge, so when they do sell out, it could therefore have a significant effect.
 
Quote from markcuban:

and its the jap yen not the yuan the carry trade is based on
More...

Yes, but if they have borrowed yen and converted it to yuan to buy chinese stocks, when they sell the stocks and buy yen to pay it back it sets the wheels in motion because the yen rises, making it more painful for anyone still short yen and long whatever, wherever, so the more that exit, the crazier it gets, both boosting yen and slamming whatever the money was invested in.
 
Quote from thriftybob:

Odd that they'd announce it on a Sunday to me, but maybe its Monday there already.

Makes you wonder where the carry trade money is invested at the moment. It must still be in there because world markets at all at highs.

At some point the fearless margin money and carry trade money will decide its time to take the cookies off the table, but when? And what will be the trigger?

Making profits doesn't do any good if you never cash them out until the parabolic goes down the other side, and I have to figure these positions must be huge, so when they do sell out, it could therefore have a significant effect.
More...

Nothing odd about it, China's People Bank (aka Central Bank) always announce policy changes in a weekend or in a public holiday (either 1st of May or 1st of Oct, both one week public holiday). Should be a hike in reserve requirement, not rate.

Quote from thriftybob:

Yes, but if they have borrowed yen and converted it to yuan to buy chinese stocks, when they sell the stocks and buy yen to pay it back it sets the wheels in motion because the yen rises, making it more painful for anyone still short yen and long whatever, wherever, so the more that exit, the crazier it gets, both boosting yen and slamming whatever the money was invested in.
More...

With close to 100b RMB traded everyday, don't hold your breath. Unless the volume die down...

Remember the Stock Market (A-share in China), it is not totally opened, foreign investor invest directly in A-share is under the QFII (Qualified Foreign Investor Scheme), so watch the local investors, when their money run dry...
 
Would like to add..

The last figures I heard, Mainland Chinese had 17 trillion saving in China's banking system. When will they run out? :confused:
 
thriftybob,

1) Wait until all those countries begin to buy other more valuable $ than the USdollar:

4/28/07 Chicago Sun-Times:

"The dollar dropped to an all-time low against the euro after the U.S. government reported the economy grew at its slowest pace in four years."

2) And how about this article supplied by WallstYouth:

http://bullnotbull.com/archive/dow13k-1.html

3) And here's what's going to happen:

".......foreign borrowing, staggers toward bankruptcy....."

http://www.amazon.com/Nemesis-Ameri...1939004?ie=UTF8&s=books&qid=1177875240&sr=1-1


thriftybob, don't forget: you heard it here.
Tom
 
Russia is buying gold not different brands of dollars.

So is UAE

So is Argentina

So is South Africa

Some others are buying Euro's, Gold, and others baskets of currencies.

I looked at that #3 book a little. Looks like BS to me. I really don't expect a military coup. I just think we'll end up with a living standard that matches what we produce minus the debt payments.
 
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