Speaking as a quant that has followed this story closely for months (and was educated about the yen carry trade in my degree), this narrative is somewhat wrong and also very obviously LLM slop.
It is true that the yen carry trade is currently being unwound and that it has significant implications for nearly all holders of treasuries. But claiming that ALL of the recent volatility is due to this one event is ludicrous. There are some blatant falsities, like saying that gold and silver are historically uncorrelated??? And it’s clear that the author has a bias against the financial establishment (“monopoly money”), coloring the output.
That said, there are legitimately interesting bits here I didn’t know about, like the Japanese institutional liquidation of US treasuries. I would not repeat this information to others without fact checking it, but if accurately described it’s an important space to watch. It’s not surprising that the LLM would get some things right, of course.
One big problem with this article is the clear prompt given to connect x current event to the yen carry trade, like Warsh’s nomination and the Greenland nonsense. This creates a lot of noise. It’s basically the LLM looking for a pattern between these things instead of identifying a structural flow. It might not even be wrong, but it’s horribly biased towards finding a fake pattern, so I would never trust it.
For the tech heads in HN that are excited to see a Justine Tunney post: don’t go crazy. If you’re really interested in learning about the unwinding of the yen carry trade, there’s plenty of information from actual experts to read about, not this slop.
We're deep in an era where "finance cosplay" is a thing. Wallstreetbets, zerohedge, the memestock subreddits. And daytrading apps to go along with that, like Robinhood. The trick is to realize that most market discussion you're not paying for is itself marketing at best and cosplay at worst. People doing this stuff professionally have Bloomberg terminals. Do not attempt to compete with Bloomberg Chat.
I am also veeery suspicious of monocausal finance explanations. There's simply a lot going on. The Greenland nonsense will definitely have moved the needle somehow; while a token deal was made to get it out of the media and allow all the insiders to front-run it, some very real changes are now going to happen over a longer period in order to decouple from US risk.
> The trick is to realize that most market discussion you're not paying for is itself marketing at best and cosplay at worst.
There was a leak posted on Wallstreetbets of some paid analysis (https://www.reddit.com/r/wallstreetbets/comments/1qpwyqz/dbs...), and it was basically follow the hype with a layer of sophisticated post rationalisation on top. I fail to see the difference between these and the average "DD" on an investing subreddit.
Excerpt from the Tesla one (https://www.dbs.com/content/article/pdf/US_clover/Tesla.pdf):
> Leading EV manufacturer. Tesla is a leading global EV manufacturer, backed by its firm market leadership and healthy automotive margins. Tesla's leading share is backed by its economic MOAT in EV charging infrastructure and supercharger network, autonomous driving and other software (e.g., full self- driving aka FSD) (...) Tesla’s pivot toward AI provides a long- term growth foundation, but near-term performance will remain sensitive to progress on AI-driven execution milestones.
The actual smart money isn't selling knowledge to anyone else. They are using it to make money.
>We're deep in an era where "finance cosplay" is a thing.
I feel the same way. It's so frustrating. I try to read and learn and then just hit one of "wait those numbers don't add up", or "this reads like the author just learned about this thing too" and other strange logical leaps time and again.
It is hard to really learn anything.
learn what you can verify more objectively instead: mathematics, physics, chemistry
Also, while I’m not an expert on Japan, I’ve been following Gearoid Reidy’s commentary on Takaichi and the new Japanese economy and I think the fears expressed are significantly overblown. But this is also characteristic of many other market participants so I wouldn’t categorize this as something obviously wrong, just a disagreement.
> If you’re really interested in learning about the unwinding of the yen carry trade, there’s plenty of information from actual experts to read about,
Ok I’ll bite. Where ?
I’m not finding a single article with a good summary, but you can find coverage on Bloomberg of all the twists and turns. FX markets are complicated, so you’ll need to do some research on how they operate as well. It’s not too hard to plug the keywords and concepts from these articles into AI and get a reasonably good background, though.
You can start here: https://www.bloomberg.com/news/articles/2024-12-02/yen-carry...
> And it’s clear that the author has a bias against the financial establishment (“monopoly money”), coloring the output.
That should have been more than obvious from the domain name and the logo at the top already.
> like the Japanese institutional liquidation of US treasuries
There were news articles about this "happening" but this event never realized.
Good to know. Thanks.
Google: january 20 japanese bond selloff
It was an worrying event, but did not cause a notable USTbill selloff.
Tbf, they are not far from a Truss-squared moment. And doesn’t help that CCP is gaining momentum with US leaving a vacuum while Sino-Japanese relation is going down the toilet.
Takaichi is much more popular than Truss was, and Japan is in a much better situation right now than post-Brexit post-COVID UK. And absolutely nobody is seeking a better relationship with the US right now other than satisfying short-term needs. Japan is not in a good spot long term (population slowdown, debt, slow economy) but there’s no reason to panic right now.
> Takaichi is much more popular than Truss was
That's about as clear as 1+1=2; I wouldn't be surprised if Truss was the least popular PM/President of the last century in the OECD at "start of tenure D+5".
> Japan is in a much better situation right now than post-Brexit post-COVID UK.
What makes you say that?
I don't think the popularity matters, more the propensity to make bad decisions. Lacking any insight into Japanese politics, I would say that the Truss Lettuce Risk Factor is much higher for the US, which often has trouble passing a budget.