When USDJPY can’t lever stocks any higher, we can always count on CL. My own, personal, favorite tin-foil-hat theory is that spanking CL prices higher is the Fed/ECB’s way of
coercing encouraging the Band of Japan to facilitate the yen carry trade by slamming the yen lower. Wouldn’t you love to be a fly on the wall for that chat?
Well…as luck would have it, a friend of mine was giving Chair Yellen her weekly foot massage this morning, and eavesdropped during a phone call she placed to BoJ Governor Haruhiko Kuroda. She was kind enought to send me this transcript.
Hello, Haruhiko? Janet here. So… the dollar-yen broke trend again, today, and it’s wreaking havoc on the yen carry trade. We can’t have that, Haru. The holidays are here, and this may our last chance to push SPX up over 2138… I know, I know. A cheaper yen makes all your imports more expensive.
But, look, we crashed oil for you. Remember last year, when it was over $100 a barrel? At 30-something, you’re saving an awful lot. What’s that? It’s up 10% in the last month? So, here’s the thing Haru. I’m trying to help you out. But, I can’t very well help you unless you help me, now can I?
I talked to Mario, and with winter coming on, he would also like cheaper oil. And, I would love to make that happen. But, you’re going to have to help me out with the dollar-yen. I’d say anything over 124 ought to do the trick. And — this is important, Haru — it needs to get there in the next week.
You sound hesitant, Haru. Haru– So, look, this is not a suggestion, right? Ever hear the expression “don’t fight the fed!?” Of course, talk to Shinzo. Talk to whomever you like. But, this is the way it is. If the dollar-yen doesn’t start bouncing in the next day or two, get ready for $50 oil again.
Sure, you can go over my head. But, Jamie and Lloyd are arguing for $80! Got it!? That’s great, Haru. My best to your lovely wife Kumiko.