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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (7611)	3/2/2007 6:32:54 PM
From: John Pitera	Read Replies (2) \| Respond to of 33421

The huge fall in GBP/JPY this week is stunning. The 5 day rate of change and 1 week rate of change is 1067 basis points!!! 10 big figures in sterling from 237 and change down to 227. This is about 80% higher thank any 1 week change in at least 5 years. I would advocate that when macro global financial instituions, macro hedge funds and global macro P E firms borrow in low funding cost yen borrowing, It is conducted through the Financial engineering capital of the world... London with New York a close second. Global FX volume is highest in London and the currency and interest rate hybrid derivative products may be even more sophisticated than those coming out of New York. A good example of this is the newly developing market in real estate Property Swaps, which is already has a dedicated fund in London and the market is further along in development. London has always been more heavily involved in currency cross (currency pair trading volume and asset allocation positioning) since the collapse of BW fixed monetary regime in the the early 1970's. Indications of a liquidity draining unwinding of the carry trade is occurring in the deepest most liquid currencies, the USD and sterling. The two acted as the priicple conduit to move global funds into higher yield riskier asset classes the past few years. I would expect this to result in an new round of selling in the US stock market the other global equity markets next week. -------------------------------