Much is made of the so-called "bond carry trade," but what has not
been noticed is that: THE ENTIRE US ECONOMY HAS BEEN ONE BIG CARRY
TRADE!!
AND, TODAY?
THAT TITANIC "CARRY TRADE" GOT A BIG MARGIN CALL!!
Consider:
EACH AND EVERY ASPECT OF THE US ECONOMY HAS BEEN MOLDED BY THE ULTRA-
LOW RATES OF RECENT YEARS. IT'S NOT JUST BONDS.
EVERYONE HAS BEEN COMPELLED, OVER THE LAST FEW YEARS, TO
SEEK "RELIEF" FROM GREENSPAN'S INCREDIBLE "ONE PERCENT SOLUTION."
And, indeed, MANY have borrowed, mortgaged or bet the future to do it!
THAT'S WHAT STARTED UNWINDING TODAY!
So Forget Bonds and the Bond Carry Trade.
What about the huge STOCK MARKET CARRY TRADE?
AND, THE REAL ESTATE CARRY TRADE? AND, THE REFI CARRY TRADE IN HOMES?
Everyone has been acting "as if" one percent money would last forever.
AND, THE COLLAPSE OF THAT ECONOMY WIDE CARRY TRADE IS WHAT WE ARE
SEEING NOW.
AND, ODDLY, IT LOOKS ALMOST LIKE A MARGIN CALL! THE MOTHER OF ALL
MARGIN CALLS!
Ain't no doubt that the REIT sellers were unwinding their carry trades today.
And, the stock sellers are unwinding their versions of a carry trade.
And, the refi and home speculation is also very close to a big carry
trade, viewed properly.
TODAY'S SELLING ALMOST LOOKED "FORCED." IT RESEMBLED A
PANICKED "MARGIN CALL."
My hunch is that once the carry trade speculators have been driven
from the temple, some new equilibrium will be established.
Curiously, the "demand" for the dollar today may have been the result
of all of the selling by foreigners and others---going EN MASSE TO
CASH! And, with dismal consequences for the gold carry trade!
SPOOKY! REAL SPOOKY! A RARE REVERSAL OF MARKET POLARITY IN ONE DAY!
What's next? Stay tuned for,......
HOW TO PLAY THIS TITANIC CARRY TRADE "MARGIN CALL!"
