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Member Since 01 Jan 2004
Online Last Active 3 minutes ago

In Topic: Week 1: Wisconsin vs. Alabama (in Arlington, TX)

14 minutes ago

Welcome to the 12 weeks of christmas

In Topic: Week 1: Wisconsin vs. Alabama (in Arlington, TX)

Yesterday, 08:49 AM

12 points?   I think you're giving the Badgers too much credit.

View PostHaymaker, on 02 September 2015 - 12:39 AM, said:

Bama 40. Wisky 12

In Topic: Word on the street

03 September 2015 - 08:40 PM

I'd play 3 QBs...

 Haymaker, on 02 September 2015 - 12:22 AM, said:

I think coker starts but saban gives 3 of em reps to see who plays them self out of the job

In Topic: Week 1: North Carolina vs. South Carolina (in Charlotte, NC)

03 September 2015 - 06:43 PM

Ouch... USC has this one in the bag

In Topic: EC 490 Macroecon and monetary policy

02 September 2015 - 07:37 PM

Market observers will point out that it’s not the Yen dragging the S&Ps, but more so the S&P500 volatility causing unwinds in the Yen carry where short sellers of Yen now have to buy it back as they liquidate their speculative positions in stocks and other risk assets. That may or may not be true, but does it even matter? Is it relevant which one sparks which? Or do we just care that they move inversely? I’m a fan of the latter, obviously.

Here is a weekly bar chart of USD/JPY which shows the Yen bottoming out in the Summer of 2007, just around the time that all of the major U.S. Stock Market Indexes were topping out. Remember, in this chart Yen is the denominator, so a top in USD/JPY represents a bottom in Yen. Notice the failed breakout in 2007 above the prior two peaks from the previous 18 months. Now look today at how eerily similar the failed breakout this Summer appears on the chart:

There is a very strong negative correlation between U.S. Stocks and Japanese Yen. In fact, the further back you go, the higher the negative correlation coefficient becomes between the S&P500 and the Japanese Currency. We’re looking at levels near or above -0.9 across the board going back a month, a year, 3 years, 5 years, etc.

Is money flowing into Yen because it is coming out of U.S. Stocks? Perhaps. Is strength in Yen causing the selling in U.S. Stocks? Perhaps. Does it actually matter whether the tail wags the dog or just that there’s some wagging taking place here?

Facts are facts, it’s just math. I would argue that further strength in Japanese Yen will continue to wreak havoc across U.S. stocks and evening specials about markets in turmoil are here to stay. For a lower volatility environment and a stronger stock market, we want to see USD/JPY getting and staying above 122. This was the level in 2007 and it is the level that we’re once again focused on today.