Other posts

MI2 for C8 – JPY Liftshaft Alert

BY JON WEBB
There is a window emerging for position reduction in the widely held JPY carry trade. Positions are crowded at the same time that the rationale for the extension of the current benign regime is diminishing (carry, carry-to-vol, policy divergence, etc). There is no sense of danger within analyst expectations or embedded in option pricing. While we lack an immediate catalyst, sometimes price can be its own trigger. With USDJPY around 156 and an easily defined stop loss, the risk reward of engaging with JPY strength is compelling. Escalator / liftshaft price action provides significant convexity. Crowded JPY shorts would also need to be covered in the event of a risk-off catalyst coming from other asset classes. Owning USDJPY puts can be an attractive portfolio hedge for investors concerned about general market complacency or for more active tactical FX managers and traders. Read more →

Thoughts From The Divide: Tricks

BY JON WEBB
Perhaps it’s just us, but as the spooky season returns and jack-o-lanterns bedeck porches, we notice that markets and commentators also seem a bit skittish. Maybe it’s the looming election, or perhaps the geopolitical horror shows, but folk seem surprisingly easy to spook. Case in point was the hullabaloo around the $44bn jump in US (government) debt. The hue and cry of folk such as ZeroHedge were enough to get more mainstream interest, including the owner of X and a son of FP Trump, to take notice. The jump is seasonal, as Constan and others pointed out, rather than some ghoulish trick, but of course it’s easy to make fun of those who took fright. But perhaps this misses the point about horror movies. Some argue that the genre works for some because it allows them to push their boundaries and learn the limits of their fears. If that describes you, we recommend reading the CBO Long-Term Budget Outlook. For others, referred to as “dark copers”, the appeal of horror movies might lie in “anxiety or fear that they’re feeling in their life, and they use scary genres like horror to kind of work through those feelings”. Read more →

NDR Dynamic Allocation Strategy August 2023 Update

BY BRIAN SANBORN
Dynamic Allocation Strategy, indicators, weightings update Read more →
Back to all posts →