monday trading, page-55

equity markets have lost all sense of reality, so its no point trying to understand the movements.

However, USD as a carry trade will run out of puff, IF the economic recovery as we have led to believe, takes its pace higher. I.e. US increasing interest rates, and thus the resumption of the Yen as the all consuming carry.

So in a nutshell, the USD is going higher, regardless of market moves. We are at the point of inflection where the equity valuations are fully pricing in a V shaped recovery. In which case, one can assume that if the V shape eventuates, then US will start raising rates soon, which means USD goes up versus the JPY, as the JPY takes over as the carry trade.

But if the market decides to pull back from here, then there is a run to safety in the treasuries, and the USD will be bid up anyway.

Seems like a plan. Or have I missed something.