Clearing the tabs ...

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"The selloff in Tokyo extended last week’s rout that followed the Bank of Japan’s decision to raise interest rates. That move pushed the yen higher relative to other currencies. Disappointing economic data in the U.S. stoked the selloff, unwinding a popular Wall Street bet known as the carry trade. 

"For years, investors around the world bought riskier assets, such as U.S. stocks, and funded the trades with the yen, thanks to ultralow interest rates in Japan. Until recently, many hedge funds and money managers expected rates to remain low and the yen weak.

"Instead, the strengthening yen has squeezed the carry trade. Investors who borrowed yen to fund their bets have been forced to buy more of the currency by bankers insisting on additional collateral. That is pushing the yen even higher, prompting more margin calls."

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Gotta be Woke 🤪 pic.twitter.com/zNQDhbF6Rb

— jason sidorski (@jason_sidorski) August 5, 2024

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"$3.5 trillion. That’s how much market capitalization the 500 companies on the S&P lost Monday, according to FactSet data.

"What it will take to stop the bleeding in the equity market. “A sustained market recovery needs a catalyst, or likely a combination of catalysts, including stabilization of the Japanese yen, strong earnings numbers, and solid economic data releases,” wrote Seema Shah, Principal Asset Management’s chief global strategist, in emailed comments. The selloff is “going to have to stop on its own with the winding down and ultimate exhaustion of levered trades,” according to Cronk, hinting at the potential for further near-term losses."

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From Ed: CNN gets to Trump pouncing at the three-minute mark.

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"Traders are betting the economy is on the verge of deteriorating so quickly the Fed would need to start easing policy aggressively. The repricing was so sharp that the swap market earlier assigned a 60% chance of an emergency rate reduction by the Fed over the coming week. Those odds subsequently ebbed.

"“The economy is not in crisis, at least not yet,” said Callie Cox at Ritholtz Wealth Management. “But it’s fair to say we’re in the danger zone. The Fed is in danger of losing the plot here if they don’t better acknowledge cracks in the job market. Nothing is broken yet, but it’s breaking and the Fed risks slipping behind the curve.”"

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From Ed: CBS News offers their Republicans Pounce!™ coverage ... 

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"That is a key reason the Fed will be reluctant to be seen acting rashly by cutting interest rates in advance of its Sept. 17-18 policy meeting, contrary to a swell of market chatter — and rising market-priced odds — since Friday.

"Why risk fueling further panic, in other words, when financial markets have already adjusted to make borrowing costs lower in anticipation of regularly scheduled rate cuts?

"What they're saying: "The law" — meaning the Federal Reserve Act that authorizes the central bank — "doesn't say anything about the stock market, it's about the employment and it's about price stability," Chicago Fed president Austan Goolsbee said Monday morning on CNBC."

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"The Associated Press' Michelle Price warned during a panel discussion Monday on CNN that the hype around Vice President Harris' candidacy might be coming "back down to earth" after the U.S. stock market plunged.

""They just a little bit ago this morning, posted the ‘brat’ meme with ‘the stock market is tanking’ in the font," Price said during a panel discussion on CNN, noting that the Trump campaign was using Kamala Harris memes to mock the vice president.  ...

""That everything that has been in this honeymoon period might seem kind of silly compared to when people are looking at their 401Ks or when they’re going to start looking at gas prices, or they’re looking at what it costs at the grocery store, that the hype that is kind of coming back down to earth. We might be entering that phase that the Trump campaign has been waiting for," Price said."

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"That is called Bidenomics... **cackling** ...and we are very proud of Bidenomics!"

Kamala Krash pic.twitter.com/Nl0knpPIyb

— Tim Young (@TimRunsHisMouth) August 5, 2024