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ASIA NEWS APRIL 24, 2011, 10:21 P.M. ET. 'Mrs. Watanabes' Blamed for Yen Surge By TATSUO ITO And MEGUMI FUJIKAWA TOKYO—In a rare reflection of wild currency moves following the March 11 earthquake, Bank of Japan Gov. Masaaki Shirakawa said it was not the widely anticipated selling of overseas assets by Japanese insurers, but rather moves by the Mrs. Watanabes that propelled the yen to an all-time high against the dollar. In an interview on Friday, the BOJ chief said actions by investors engaged in margin trading—the favorite game among the herd of small Japanese investors represented by a mythical...

Best Buy, Krugman and the Carry Trade Submitted by Bruce Krasting on 11/29/2009 22:35 -0500 /snip On ABC’s "This Week" show there were some interesting thoughts from Paul Krugman. He remarked: “The cost of the deficit is only 1.2% real rate of interest at the Federal level.” This is economic speak. What Mr. Krugman was saying is that the Government can borrow long term at 3.2% and inflation is 2% so the real cost of debt is only 1.2%. In response, George Will made the point: "In ten years the interest cost of servicing the debt will go to $700...

Brazil sparks wider currency control fears By Peter Garnham Published: November 19 2009 11:37 | Last updated: November 19 2009 11:37 Asian currencies came under pressure on Thursday as a move from Brazil to further curb foreign inflows sparked fears that other countries would follow suit. Brazil moved overnight to close a loophole that had allowed investors to avoid a 2 per cent tax on foreign investment in equities and bonds announced last month. The government announced a 1.5 per cent tax on American Depositary Receipts. Guido Mantega, Brazil’s finance minister, said some foreign investors had been buying ADRs to...

Dollar carry trade could herald the next global crisis, analysts warn Leo Lewis, Asia Business Correspondent The global economy could be poised for the creation of a potentially explosive dollar carry trade, analysts said yesterday. The trade allows investors to borrow dollars at near-zero interest rates, which they use to fund asset-buying sprees around the world, and has been possible since the collapse of Lehman Brothers last year and the extreme monetary response to its aftermath. The warning was issued at the Apec summit of Asia Pacific leaders in Singapore and came after a variety of assets started to display...

'Mother of Carry Trades' Leading to 'Asset Bust': Roubini Published: Wednesday, 4 Nov 2009 | 8:19 AM ET By: Jeff Cox CNBC.com The "mother of all carry trades" that Nouriel Roubini warned of recently is growing and threatening to cause a global implosion, the economist warned in a CNBC interview. For the second time in as many weeks, Roubini cautioned that investors using cheap US dollars to embrace risk will quickly reverse course once the greenback strengthens. But he intensified his prediction, saying that the likelihood of the Fed keeping interest rates low and thus weakening the dollar will prolong...

5 Signs Irrational Exuberance Is Back http://www.fool.com/investing/general/2009/10/14/5-signs-irrational-exuberance-is-back.aspx Alex Dumortier, CFA October 14, 2009 At a time when many pundits or "investors" are grasping at straws to justify the market's run, I'm seeing an increasing number of buds of "irrational exuberance" (in the words of the maestro bubble-blower Alan Greenspan). It's as if the crisis was a sharp but fleeting pain that investors wish to relegate to the status of a bad memory. To give a jolt to our market nervous system, here are my top five signs that exuberance is returning to the market at an alarming rate: 1. Stocks...

We Are in the Mother of All Carry Trades: Roubini Published: Monday, 26 Oct 2009 | 9:20 AM ET Text Size By: Antonia Oprita Associate Web Producer, CNBC.com Most investors follow the same strategy of borrowing in dollars and investing in assets across the world and when the greenback's downward trend will reverse, there may be a crash in global assets, Nouriel Roubini, Chairman, RGE Monitor, told CNBC Monday. cnbc.com "There is a wall of liquidity…chasing assets," Roubini told "Squawk Box." "Now we are in the mother of all carry trades," he added. Asset prices have been inflated by the...

Daily FX Carry Trade Falls Sharply on Risk Aversion Monday November 12, 10:23 am ET By Antonio Sousa, Quantitative Strategies Analyst strategist@dailyfx.com Investors are becoming more risk averse on speculation major banks could announce more write downs tied to subprime home loans, a situation that has been benefiting the Japanese yen and triggering a major sell-off on carry trades. Not surprisingly, during last week, the DailyFX Dynamic Carry Trade Portfolio was down by 540 pips. The biggest loss was taken in the short position we held in the Japanese yen with 415 pips loss. Moreover, since stop losses are activated...

So what is the “Carry Trade” about and what does it have to do with the turmoil in the global markets? To understand this phenomenon we have to learn two terms: 1. Carry trade and … 2. Margin call. First, the “carry trade.” This refers to the practice of borrowing money at a low rate and investing it at a higher rate. As you all learned by reading your Wall Street Journal, interest rates in Japan have been remarkably low; virtually zero. Enterprising speculators have been borrowing money in Japan and investing it in securities that paid more. These could...

Former Fed Chairman Greenspan has recently commented to the effect that the worst of the housing recession is behind us. History is not on the side of this view. Chart 3 shows the peak-to-trough percentage declines in the GDP line item, real residential investment. In the prior nine housing cycles, the average peak-to-trough decline is 24.6%; the median is 22.6%. The peak-to-trough decline to date in the current housing recession is 7.9%. Unless this turns out to be a more moderate than usual housing recession, unlikely given the amount of speculation and leverage involved in the boom, then we have...