What we just witnessed in real time was the biggest "policy error" in human history. The Fed monkey hammered commodities and Emerging Markets for nothing. They faced the choice to admit they have no idea what the fuck they are doing, or to create a fake-believe recovery, and they chose the latter course...
The strong dollar monkey hammered Commodities and Emerging Markets. Now weak dollar strong Yen will finish the job:
The Ponzi update: aka. "what the fuck just happened?"
Starting over a year ago, the fake dollar rally shellacked oil and Emerging Markets, all predicated upon a U.S. recovery that is non-existent.
"It turns out strong dollar was a mistake after all...our bad"
Dollar Index (red) with EM currencies:
That same dollar strength propelled Yen weakness, leading to Dollar /Yen rally and inflating the go-to Yen carry trade, no small amount of which appears to have ended up in the U.S, if S&P futures are any indication.
I think we all see where I'm going with this...
Dollar index (black) with Dollar / Yen (red)
Tanking U.S. interest rates will now accelerate dollar outflows:
10 year yield:
In summary, the dollar rally is over. Dollar weakness and dollar carry unwind will propel the Yen in the opposite direction (strengthening), as the flight to safety/carry trade unwind accelerates.
Basically, the dollar monkey hammered global markets. And the Yen will finish them off.
But first, all shorts must cover. You know the drill:
