We have recently witnessed or are about to witness the implosion of a series of crowded trades namely long bitcoin, long Index ETF's and short volatility. The most important crowded trade of all is the dollar carry trade and this has been in vogue since the early 1980's. However the dollar appears to have broken out of its long term down trend line in the last 8 years post the great recession of 2008 though reluctantly so. When the real up move in the dollar occurs which is imminent look for massive carry trade liquidation and a rout in risky assets such as stocks, commodities and emerging market currencies:
About
Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin is a PhD and received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.
Featured post
Time Series Analysis with GRETL
This video shows key time-series analyses techniques such as ARIMA, Granger Causality, Co-integration, and VECM performed via GRETL. Key dia...
Showing posts with label carry trade. Show all posts
Showing posts with label carry trade. Show all posts
Wednesday 7 February 2018
The Most Important Crowded Trade of All?
Labels:
bitcoin,
carry trade,
dollar,
etf,
stock market crash,
vix,
volatility
I have over 27 years of experience tracking capital markets across the globe, I write about financial markets and teach MBA students financial markets and investing
Wednesday 15 June 2016
Brexit is Official - Big Downside Ahead
We now know the Fed is on hold for the foreseeable future. Markets are now focusing on Brexit. The referendum has gone decisively in favor of a Brexit. This is all set to rock risk assets with some significant downside. A set up very similar to August 2015 and January 2016 is developing. Lets look at some key drivers:
1) The Vix:
Volatility has begin to surge yet again with the Vix eclipsing the 20 mark. The Vix has not made new lows with each of the recent highs in the S and P 500 and could eclipse its February highs soon:2) The Yen:
The Yen has just made new highs for 2016 and is looking to head to the 100 mark as risk aversion and carry trade liquidation become the game in town:3) Gold:
Gold is also benefiting from its safe haven status as paper assets go out of favor. Gold is sitting very close to its 2016 highs:4) Commodities:
Economically sensitive commodities like copper and oil have resumed major break downs and are likely to head much lower as global economic weakness takes center stage:5) Stock Markets:
European markets are already sporting big break downs along with emerging markets and the trend is likely to continue and spread to markets in the US and else where:
Labels:
brexit,
carry trade,
commodity,
emerging market,
fed,
gold,
stock market,
vix,
yen
I have over 27 years of experience tracking capital markets across the globe, I write about financial markets and teach MBA students financial markets and investing
Friday 1 January 2016
Predictions for 2016
Here are my predictions for 2016:
1) 2016 is finally the year when the Euro breaches parity to the Dollar:
2) 2016 will prove to be a year of significant under performance of risk assets, particularly global stock markets and emerging market currencies:
3) 2016 will prove to be the year where carry trades get liquidated as significant Yen strength resumes:
4) Volatility surges in 2016 as global risk aversion increases significantly:
Labels:
carry trade,
dollar,
euro,
predictions,
risk aversion,
stock market crash,
volatility,
yen
I have over 27 years of experience tracking capital markets across the globe, I write about financial markets and teach MBA students financial markets and investing
Thursday 31 December 2015
Update on Those Predictions for 2015
At the beginning of 2015 I made some predictions for grins. Here's how they played out:
The original post containing the predictions can be found here:
1) Dollar strength continues after a brief pause against all major currencies except the yen. With the Euro decisively breaking the long term support of 1.20.
This indeed was the year of dollar strength with the Euro below 1.10 and the trend may continue well into 2016.
2) Yen strength should result in a bout of carry trade liquidation that is a major negative for risk assets such as emerging market currencies and commodities.
While the dollar was broadly strong against the yen, the Yen was relatively strong against most other majors and 2016 promised to be year of Yen strength. This year saw a massive down move in commodities as expected.
3) Despite slowing growth in most emerging economies, policy makers have their hands tied and spend a whole lot of resources defending their weak currencies unsuccessfully with higher interest rates.
Emerging market currencies saw major take downs ( The Real & Rand being notable examples) across the board and the trend is set to continue in 2016.
4) This in turn sparks a major exodus of FII money flows out of emerging economies like the BRIC countries which causes their stock markets to significantly under perform despite their terrific performance in 2014 and greedy analysts calls for more.
BRIC stock markets under performed significantly in 2015 except China and more weakness is likely in 2016.
5) Volatility surges in 2015 as the Vix index doubles following a major take down of stock market indices across the globe.
The Vix crossed 50 briefly in August before retreating. A big up move in the Vix is likely in 2016.
6) Risk free assets will be among the safer bets in 2015 as risk appetites significantly wanes with treasury yields continuing to plummet with QE forever still continuing but without the desired outcomes.
Risk free assets outperformed risky assets globally but US long term yields rose as the FED began tightening Monetary policy. Risky free assets will continue to outperform in 2016.
Happy New Year!
Labels:
2015,
2016,
bric,
carry trade,
commodity,
currency,
dollar,
fed,
risk free assets,
stock market crash,
volatility,
yen
I have over 27 years of experience tracking capital markets across the globe, I write about financial markets and teach MBA students financial markets and investing
Subscribe to:
Posts (Atom)
Stock Market News
Amazon Deals
World Indices
Live World Indices are powered by Investing.com
Market Insight
-
-
-
Should You Pick Eli Lilly Stock After A 4x Rise In Three Years? - This can primarily be attributed to a significant 236% rise in the company’s P/S ratio to 21x now, versus 6x in 2020.55 minutes ago
-
AstraZeneca's $2.4B Fusion Pharmaceuticals' Acquisition Signals Shift In Efforts From Traditional Regimens For More Targeted Cancer Treatments - AstraZeneca to acquire Fusion Pharmaceuticals for $21.00 per share cash plus $3.00 per share CVR upon regulatory milestone achievement, marking a signifi...1 hour ago
-
Sound Income Strategies LLC Lowers Stock Holdings in Union Pacific Co. (NYSE:UNP) - Sound Income Strategies LLC trimmed its stake in Union Pacific Co. (NYSE:UNP – Free Report) by 18.3% during the 4th quarter, according to the company in it...2 hours ago
-
Daily Market Brief - Subscriber content. To subscribe to the Daily Market Brief please visit Market Services on NorthmanTrader.com. The Daily Market Brief is an in-depth market...2 hours ago
-
Debt Rattle March 19 2024 - Rembrandt van Rijn Christ In The Storm On The Sea Of Galilee 1633 Stolen from Gardner Museum March 18 1990, the single largest property theft in the worl...3 hours ago
-
Election Years Are Different | Tom McClellan - I have been writing about the Presidential Cycle Pattern since 1994, using the pattern which is derived from averaging together SP500 price data in 4-year ...8 hours ago
-
What Is Happening In Haiti Will Come Here Too - The kind of rampant civil unrest that has thrown Haiti into turmoil will happen in the United States and other wealthy western nations too. At this poin...15 hours ago
-
S&P 500 PE Ratio - *Current S&P 500 PE Ratio:* 27.95 +0.18 (0.63%) 4:00 PM EDT, Mon Mar 1816 hours ago
-
Don't Mistake Canoo Stock's "Bump" for a "Rally" - Don't Mistake Canoo Stock's "Bump" for a "Rally" The electric vehicle (EV) market is witnessing a volatile period, with Canoo (GOEV) recently experiencing ...19 hours ago
-
Monday links: the ultimate anecdote - IPOs - Apple ($AAPL) and Google ($GOOGL) are exploring putting Google's AI on the iPhone. (spyglass.org) - A closer look at Reddit's risks. (wi...20 hours ago
-
Do Magazine Covers Contain Market Signals? - There has been a lot of chatter about magazine covers lately; I thought I might clarify some of the with this post, originally published in Bloomberg o...23 hours ago
-
Has US-China decoupling energized American manufacturing? - In recent decades, the US has grown increasingly dependent on imports from China to access a vast variety of goods. The FRED graph above shows Chinese impo...23 hours ago
-
Biotech Is Back: Watch This $100 Billion Trend - After a rough bear market, it looks like biotech stocks are charging higher. Here's a trend that points to more bullish action in 2024. The post Biotech ...1 day ago
-
Mike Tyson is getting back in the ring at 58 – what could go wrong? – Stephen Hughes - Mike Tyson is getting back in the ring at 58 – what could go wrong? Stephen Hughes, Anglia Ruskin University If at 58, I were to agree to a boxing match wi...1 day ago
-
Chill Time - Weekly report covering Gold, Equities, Crude, Dollar. A look at trade opportunities and covering the model portfolio. The post Chill Time appeared first ...2 days ago
-
Why Social Trust Is Cratering: The Difference Between Elites and Commoners - *We trust what we own / control, and the difference between elites and commoners is the elites own / control the wealth and power that dominate our daily l...3 days ago
-
Striking Gold: How to Catch a Once-in-a-Decade Breakout Move - In trading, timing is everything. Catching that massive breakout move that can deliver life-changing gains is the dream of every trader. And according to...4 days ago
-
Election Years Are Different - [image: presidential cycle patterns in election years] We are now firmly into this election year, with both major parties' candidates determined. This m...4 days ago
-
Weekend leverage increase - Dukascopy Bank is lowering its margin requirements on weekends which is applied Fridays for all clients holding JForex Trading Accounts. Starting 15 March...4 days ago
-
Is NVDA Stock Headed for a Correction? - NVIDIA Corporation (NVDA) has undeniably emerged as a powerhouse in the world of chips, riding high on the wave of the Artificial Intelligence (AI) frenzy....5 days ago
-
Weekend Update - Trendline rejection (3/8/24) - SPX was rejected by the blue trendline Friday. The trendline had been sucessfully tested four times and held since November, until now. SPX has unable ...1 week ago
-
Catastrophic Risk: Investing and Business Implications - In the context of valuing companies, and sharing those valuations, I do get suggestions from readers on companies that I should value next. While I d...4 weeks ago
-
Hello world! - Welcome to WordPress. This is your first post. Edit or delete it, then start writing!1 month ago
-
-
Teaching Johns Hopkins A Privilege Lesson - by Not Sure01/12/24Johns Hopkins Hospital Chief Diversity Officer Sherita Hill Golden sent a letter out essentially implying that all people who don’t look...2 months ago
-
Mungerisms: Timeless Wisdom from Charlie Munger on Life and Business - "Mungerisms" are succinct expressions of wisdom and insights coined by Charlie Munger, the Vice Chairman of Berkshire Hathaway and Warren Buffett's longtim...3 months ago
-
If You Find Deer or Elk Antlers on the Ground, Leave Them There, Say Some States - Even though elk do shed their antlers naturally, collecting them brings up a number of ethical issues.5 months ago
-
It’s Crunch Time for The Daily Doom and Doom Time for The Great Recession Blog - The Great Recession Blog is officially done for good, and it remains to be seen if all my writing continues on TheDailyDoom.com. If my writing on economi...8 months ago
-
Innovative Industrial Properties Stock a Great Way to Play Pot Sector - *IIPR Stock Represents a Long-Term Opportunity* Marijuana stocks briefly attracted investors' attention following the 2022 mid-term elections, when Maryl...1 year ago
-
2008 analogue - The 2008 analogue tape looks very interesting from where we stand. Let's anchor it to the next two Fed meetings -- since that's all that matters -- and i...1 year ago
-
Back to trade with Bar Replay - It is often said that one should not be sad about the past, but sometimes it can be nice to return to it. Who would like to buy Tesla for $1 and experience...1 year ago
-
After This Holiday Rally, You Better Know When To Walk Away - This week’s investor insight will make you think twice about the current stock and bond rally as we head into the end of the year. We get a lot of questi...1 year ago
-
How Africa Can Escape Chronic Food Insecurity Amid Climate Change - The toll of extreme weather events on crops underscores the region’s challenges and need for policies to save lives and protect livelihoods.1 year ago
-
12 Bear Market Rules To Live By – Survive & Thrive In The Next Bear Market - 12 Bear Market Rules To Live By – Survive & Thrive In The Next Bear Market [image: Bear Market Rules Survival Guide] I grew up in the 1970s-1980s when th...1 year ago
-
Growth Companies – Getting What You Want - What do the growth companies in your field have in common? How are they doing so well and what can you learn from them? Growth companies usually make a pro...1 year ago
-
-
Blog Post Title - What goes into a blog post? Helpful, industry-specific content that: 1) gives readers a useful takeaway, and 2) shows you’re an industry expert. Use your c...2 years ago
-
Foot Locker Crushed Q2 Earnings Expectations Sending Stock Higher - Plus, AstraZeneca said its antibody therapy reduced the risk of developing COVID-19 symptoms by 77%, The Topps Co’s SPAC merger is off, and Elon Musk annou...2 years ago
-
Elliott Wave Stock Market Update - July 10th - The market has continued its rally to higher highs and it doesn't seem like it wants to stop. We now have a new ATH at 4371 which are NASDAQ levels s...2 years ago
-
The Psychology of QE is Far More Important Than the Amount of It - Let's discuss what QE really does vs the psychology of QE.2 years ago
-
Hello world! - Welcome to WordPress. This is your first post. Edit or delete it, then start writing!3 years ago
-
Trading: Opportunities Are Dispersed - Opportunities are dispersed. You might have an... *READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS * *Jim Rogers is a legendary i...3 years ago
-
Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning November 09 - Indicator Weekly Level / Change Implication for S & P 500 Implication for Nifty* S & P 500 3509, 7.32% Bullish Bullish Nifty 12264, 5.34% Neutral ** Bullis...3 years ago
-
November report "Is it True, as David Hume (1711 – 1776) postulated that, "Nothing is esteemed a more certain sign of the flourishing conditions of any nation than the lowness of interest"?" published. https://bit.ly/2y4LJZQ - November report "Is it True, as David Hume (1711 – 1776) postulated that, "Nothing is esteemed a more certain sign of the flourishing conditions of any n...3 years ago
-
Fully Automated Trend Trading w/ Stocks Or Options - There’s a lot of research to support the usage of trend indicators as simple risk reduction elements that can be layered onto an existing strategy. Howev...3 years ago
-
2020 Top Investment Picks – Q3 Update - At the beginning of the year, I put together a list of Top Investment Picks for 2020 from the investment community and track them on this website. This is ...3 years ago
-
Upside-Down Markets: Profits, Inflation and Equity Valuation in Fiscal Policy Regimes - I just published a new long-form piece through OSAM entitled “Upside-Down Markets: Profits, Inflation and Equity Valuation in Fiscal Policy Regimes.” In th...3 years ago
-
The last of 12326 - February 22nd 2012..... First post... https://permabeardoomster.blogspot.com/2012/02/can-anyone-fly-plane.html -- This post will be the last under the o...3 years ago
-
-
Ultramarathoner Runs Over 200 Miles in Backyard, Wins Golden Toilet Paper Roll - Strange times indeed. In the land “BC,” before coronavirus, people ran long distances in foot races, and toilet paper wasn’t coveted. Things have changed. ...3 years ago
-
One Year Later - A year ago today I lost my father and my best friend, everyone here lost their mentor and a friend. Dad and I spent the last 7 years of his life living tog...4 years ago
-
-
Advanced Micro Devices (AMD) Retreating Towards Key Support Around $25.60-$27 -
AMD has failed to clear the 2018 high around $34.20. It is retreating, and has broken an August/September sup...
4 years ago -
Advanced Search is Now on Stocktwits - Advanced Search Is Now on Stocktwits Come rain or shine, the Stocktwits community shares over 200,000 messages per day. That includes charts, news, trade i...4 years ago
-
Nightly Algo Report – December 6, 2018 - To access this post, you must purchase Premium Plan or Premium Plan - Annual. The post Nightly Algo Report – December 6, 2018 appeared first on Elliottwa...5 years ago
-
Don’t be Fooled by the Pullback in the Dollar Because…. - Don’t be fooled by the pullback in the U.S. dollar today because the greenback could still strengthen further before the end of the year. Nearly all of the...5 years ago
-
A look at the bull market ahead - My latest missive on the near-term stock market outlook can be seen at Financial Sense web site. You can see it by clicking on the following link: https:/...6 years ago
-
Weekly Videos - This week’s video will be posted on the new home for Short Takes. If all goes well, it will appear sometime between 6:00 and 8:00 pm ET.6 years ago
-
Gold Miners near a buy zone - Gold cleared a several month long consolidation a few weeks ago as it cleared $1300, and has since been consolidating as it drifts back to […] The post G...6 years ago
-
Current Account Deficits and Safe Assets - The International Monetary Fund has issued its External Sector Report for 2017, and among its key findings: “Global current account imbalances were broadly...6 years ago
-
Kafka For The Twenty First Century - I've been spending a slightly frustrating day trying to update my payment details at google. To log in to my admin console I need to log in using my G Sui...7 years ago
-
Gold Unleashed by Fed - Gold's next major upleg was likely unleashed by a very-dovish FOMC this week, which now has its hands tied on hiking rates or being hawkish due to the US e...7 years ago
-
August 24th Blogger Sentiment Poll - There are more bulls than bears in this week's poll. Blogger Sentiment Poll Participants: 24/7 Wall St (N) Carl Futia (+) Dash of Insight (+) Elliot Wave L...14 years ago
My Favorite Books
- The Intelligent Investor
- Liars Poker
- One up on Wall Street
- Beating the Street
- Remniscience of a stock operator
Trading Ideas
Forex Insight
-
Canada BoC Consumer Price Index Core (YoY) declined to 2.1% in February from previous 2.4% - Read more on https://www.fxstreet.com23 minutes ago
-
Euro Latest – ZEW Economic Sentiment Improves, EUR/USD Hinges on FOMC Decision - Economic sentiment in the Euro Area and Germany turned higher in March, according to the latest ZEW report, but Wednesday’s FOMC meeting will dictate the n...1 hour ago
-
Aussie slides after RBA’s pause - The Australian dollar is sharply lower on Tuesday. In the European session, AUD/USD is trading at 0.6507, down 0.80%. The Aussie is on a nasty slide and ha...3 hours ago
-
Daily Forex News and Watchlist: USD/JPY - The BOJ has officially exited its negative interest rates era! But why did USD/JPY pop up and just how high can it go?3 hours ago
-
Don’t be Fooled by the Pullback in the Dollar Because…. - Don’t be fooled by the pullback in the U.S. dollar today because the greenback could still strengthen further before the end of the year. Nearly all of the...5 years ago
-
EUR/USD Weekly Outlook - EUR/USD's decline attempt was contained at 1.0494, above 1.0493 support and rebounded. Initial bias stays neutral this week first. On the upside, break of ...7 years ago
-
Loonie and Aussie Share Downward Bond - In yesterday’s post (Tide is Turning for the Aussie), I explained how a prevailing sense of uncertainty in the markets has manifested itself in the form of...12 years ago
Economic Calendar
India Market Insight
-
Subdued listing: Popular Vehicles and Services shares close 6% down on debut - [image: Subdued listing: Popular Vehicles and Services shares close 6% down on debut] This was the fourth subdued listing in current month. R K Swamy, JG C...1 hour ago
-
Nifty, 19 March 2024 Trade Plan - Foreign Institutional Investors (FIIs) displayed a Bullish approach in the Nifty Index Futures market by Buying 2674 contracts worth 295 crores, resulti...9 hours ago
-
Rupee falls 29 paise to close at 82.68 against US dollar - During the day, the rupee touched a high of 82.45 and a low of 82.68 against the greenback. On Friday, the rupee had settled at 82.39 against the dollar.9 months ago
-
-
ES Hourly cloud and 4 Hour chart - - ES Hour moving towards the hourly cloud which may act as resistance. - 4 Hour chart shows a possible bullish candle which may give new high's ...2 years ago
-
JUST NIFTY BLOG 10-01-2020 - Bulk Deals FII DII Stats Date # of Deals Total Volume (In Millions) 01-01-1970 0 0.00 Click here to see all Bulk Deals Date Category Buy Amount (Rs. Cror...4 years ago
-
Vist Note on Federal Bank - We recently met the senior management of Federal Bank which is one of the old private sector banks with a distribution network of 1252 branches (48% Kerala...5 years ago
-
Nifty Bulls bounces ferociously holding 9930,EOD Analysis - FII's bought 4.8 K contract of Index Future worth 262 cores ,9.7 K Long contract were added by FII's and 4.8 K Short contracts were added by FII's. Net Ope...6 years ago
-
Midcap & Smallcap Index Corrects, Lets Come Back To Fundamentals Again - Midcap Index had made a high of 18511 on 16th May 2017, fell almost 7% and is currently trading at 17230. Smallcap Index made all time high of 7679 on 11th...6 years ago
-
Market outlook for 30/10/2016 - *Nifty closed up 22.75 points (0.26%) at 8638.00* while Future closed at 8667.40, premium of 29.40 points. *Bank Nifty closed up 41.35 points (0.21%) at 19...7 years ago
-
Option Open Interest for 28-10-2016 - Inference The index opened flat to positive and after making an initial low around 8581 saw some short covering to close at 8638.00, gain of 22.75 points. ...7 years ago
-
Market Review for 23rd August 2016 - *Nifty (8629)* we said ‘technically trend is still intact but there exists selling pressure near 8746 and support around 8600 zones’ the Nifty unfolded as...7 years ago
-
ITC To Resume Cigarette Manufacturing - ITC manufactures a range of cigarette brands, including India Kings, Classic, Gold Flake, Navy Cut, Capstan, Bristol, Flake, Silk Cut, which are manufactur...7 years ago
-
My Asset Allocation Strategy (Indian Market)
Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%
My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%
My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.