We are not at the end game stage - maybe next year.
I believe a large part of the more aggresive carry trades have been unwound OR hedged out for a short term. The signals of higher US rates, lower USD, higher JPY Yen have comming for a LONG time.
Let's take the example of one aggresive trader with a good track record....
You borrowed a bunch of JPY at low interest, and bought appreciating US/Canadian assets, some of which paid good monthly dividends. You have unwound trade about the middle of last year, and are now long Japan assets. If the bulk of the carry traders are 3 months behind you, then there will only be a problem for the slow ones who can't outrun the wolves...;-). If most hedge fund mangers are 8-9 months behind you, then your forecast may be correct.
1) Good news on US credit card debt -
Credit cards being paid down too quickly
This can lead to a deflation danger - lower interest rates are easier to pay off -
thestreet.com
Some consumers are hurting, but many are not...
Housing prices will have to FALL before this blows up - and some housing is still going up.
2) Note that cars can be built profitably in the US and Canada at multiple Japanese and European owned plants. For GM and Ford, just offload some of the legacy costs, like the airlines did.
GM has about 3 Billion negative cash per quarter, but about 30 Billion in cash. Trim that cash bleed down just under 2 Billion, and GM becomes a problem for the next (possibly Democratic) administration, not for the GW Bush team.
Of course, our gang in Washington would never pull a stunt like that...would they ?
Straight reporting on GM-
thestreet.com
Peter Eavis' negative view - note he thinks money is being pumped into GM somehow -
thestreet.com
Peter is consistently negative on consumer debt companies - he has a little Perma-Bear attitude.
3) Note that most US business have LOTS of cash, and are making money. More cash comming back to US with the USA Jobs act.
My guess is we will need 50 more basis points from the FED before we get real risk. |
