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The Widowmaker is Back, Head for Greggs

By Lucian Miers | Tuesday 6 August 2024


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


By far the biggest carry trade is USD/JPY. It’s about $4 trillion worldwide (roughly the size of the German economy). How it works is really quite simple. You borrow yen at 0% and use it to buy dollars (yielding 4.5% in money markets). Oh and you lever up ten times for a juicy 45% yield. Maybe you park your gains in NASDAQ, sit back and relax. The beauty is that the yen (yielding 0%) is bound to depreciate against the dollar (yielding 4.5%), so you get a capital gain thrown in too when it’s time to return the yen.
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