The Pomp Podcast #1391 Darius Dale | How Japan Broke Bitcoin and Stocks!
Aug 7, 2024
Darius Dale, Founder & CEO of 42Macro, dives into Japan's financial landscape and its ripple effects on global markets. He discusses how Japan's low yields and the Yen carry trade are stirring chaos in the world economy. Darius also analyzes the potential decline of the U.S. dollar and its impact on international trade. Additionally, he forecasts rising inflation linked to political shifts, highlighting crucial indicators investors should watch. This insightful conversation offers vital strategies for navigating current market uncertainties.
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Japan Carry Trade Unwind Impact
- Japan's low interest rates made it a popular funding currency for global leveraged positions via the carry trade.
- Unwinding this carry trade causes volatility as rates normalize and impact currency markets globally.
Markets Expect Sooner Fed Rate Cuts
- US dollar markets are pricing in rate cuts faster than the Federal Reserve's official guidance.
- Markets want the Fed to ease rates quickly to support the US business cycle.
Fed Cuts Could Hit Dollar Hard
- Historical Fed rate cuts during recessions average around 475 basis points.
- Markets fear rate cuts beyond current pricing could drastically weaken the US dollar and accelerate carry trade unwinds.