tag:blogger.com,1999:blog-6714063.post5684744646519494755..comments2023-10-09T00:45:55.603+09:00Comments on Shisaku: Japanese small investors: 1MTChttp://www.blogger.com/profile/04626942240117432624noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6714063.post-65678219121686595872007-06-21T04:24:00.000+09:002007-06-21T04:24:00.000+09:00I have to agree with Jun here. Ordinary forex trad...I have to agree with Jun here. Ordinary forex traders cannot get loans at overnight rates. They might be (surely are) trading on margin, but there's no way they're getting overnights. <BR/><BR/>The Commitment of Traders data pretty clearly shows where the large institutions have their dump positions set, and they're still betting on the yen getting weaker, which also makes me wonder about the article, since the Bloomberg writer should certainly know that FX 'projections' rarely reflect the actual behavior of in-house proprietary traders.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6714063.post-44221991462680553002007-06-19T19:39:00.000+09:002007-06-19T19:39:00.000+09:00Correction:False: (Does, for example, the risk of ...Correction:<BR/><BR/>False: <I>(Does, for example, the risk of holding on to those Swedish state bonds for the better part of thirty years excite you?)</I><BR/><BR/>True: <I>(Does, for example, the risk of holding on to those Swedish state bonds <B>at zero interest</B>for the better part of thirty years excite you?)</I>Jun Okumurahttps://www.blogger.com/profile/00291478225274759649noreply@blogger.comtag:blogger.com,1999:blog-6714063.post-3066155330197122132007-06-18T16:02:00.000+09:002007-06-18T16:02:00.000+09:00Jun - I was going to direct you to the Brad Setser...Jun - <BR/><BR/>I was going to direct you to the Brad Setser post where Andrew Rozanov explains how the carry trade is done:<BR/> (http://www.rgemonitor.com/blog/setser/176376/)<BR/><BR/>However, RGE has put the vital part of the post behind the subscription wall.<BR/><BR/>If I remember Rozanov's full answer you zero out currency risk by setting up a triple trade that borrows against both currencies--a trick so elaborate and seemingly self-defeating I could not fathom its point.<BR/><BR/>Hence the title of my post on the subject at:<BR/><BR/>http://shisaku.blogspot.com/2007/02/do-ya-want-to-feel-dumb-today.htmlMTChttps://www.blogger.com/profile/04626942240117432624noreply@blogger.comtag:blogger.com,1999:blog-6714063.post-22535053428442414892007-06-18T14:42:00.000+09:002007-06-18T14:42:00.000+09:00What's mystifying about this article is how these ...What's mystifying about this article is how these housespouses and salarypersons manage to borrow money at the overnite rate. Individuals usually have to borrow and buy retail, which definitely shaves the margin available to them. Which means that anyone buying now may have his margin easily wiped out by a slight shift back up on the part of the yen. (Say, September, with BOJ in action, the aftermath of the July elections well behind them?)<BR/><BR/>Actually, I assume that many of these people are not borrowing, and if they do they are borrowing against their long-term yen deposits, which would limit both potential gains and losses.<BR/><BR/>I also assume that at least some of this money is not going directly to foreign bonds but is funneled through the so-called <I>"shikumi-sai"</I>. This basically locks in high returns for a few years, in return for assuming risk further down the line. (Does, for example, the risk of holding on to those Swedish state bonds for the better part of thirty years excite you?)<BR/><BR/>If that doesn't daunt you, I have a friend who has to sell a bridge to someone who'll take good care of it. He'll make it cheap...<BR/><BR/>Oh well, if <I>Bloomberg</I> says, it, it must be true.Jun Okumurahttps://www.blogger.com/profile/00291478225274759649noreply@blogger.com