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[n83]

http://www.reuters.c...044532320070416

Forex-Yen hits new low vs euro as G7 boosts carry spree

"..The yen hit a record low against the euro on Monday as Group of Seven finance officials did not express concern about the Japanese currency's weakness at a weekend meeting, prompting traders to load up on carry trades."

[TTHQ Staff]

From Mark Leibovit this morning:

The landscape has changed for the world equity markets. The simple markets of yesteryear strongly influenced by brokerage recommendations and the free forces of 'supply and demand' are a thing of the past. The movement in the stock market is no longer solely a function of analysts forecasts or economic and geopolitical developments. The movement is now controlled by forces that the average guy on the street can barely comprehend.

The infamous 'yen carry' trade which involves borrowing in Japanese yen at less than 1% to invest in riskier assets like commodities and stocks has mushroomed to an estimated $500 billion to $800 billion in size. It's made the Bank of Japan the world's top central banker. And, the U.S. Treasury (and along with them the Plunge Protection Team) and the Federal Reserve are key collaborators with Tokyo in guiding the dollar/yen and the Dow Jones Industrials. The U.S. Treasury is happy with Japan's super low interest rates because they help to keep U.S. long term rates artificially low at a time when the Dow Jones Commodity Index is up near 25 year highs (a Fed conundrum). Meanwhile, should Japan normalize its interest rates, it would send the U.S. Treasury yield well above 5% creating a U.S. housing trainwreck.

You don't hear about it on CNBC, but this week the Fed bought $1.8 billion of Treasury bonds, pumping permanent reserves into the banking system to keep the stock market moving higher (not to mention overt activity by the PPT in stock market futures themselves). Liquidity and the PPT are driving the market higher not earnings or economic forecasts.

Secret talks are now underway among the Top 5 economic super powers (U.S., China, European Union, Japan and Saudi Arabia) and it is rumored that U.S. Treasury chief, Henry Paulson (from Goldman Sachs) is expected to tell other G-7 members that by mid-2007 the worst should be behind us on housing STRONGLY IMPLYING THE FEDERAL RESERVE WILL SOON BEGIN LOWER INTEREST RATES.

Continued in the New Market Analysis Area

[Data]

There's been a very strong correlation between the Dollar/Yen and the SPX as shown on the charts in this article.

http://biz.yahoo.com...70_id.html?.v=3