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Lamont, most of the hedge funds have been long the dollar & bonds and short
the yen. They've basically been borrowing money from banks in Japan for
virtually nothing, converting it into dollars, and buying bonds. They've
made a killing up until now off the interest spread and the rising dollar.
In order to get out of this trade, they've been selling bonds & dollars and
buying yen to pay off the loans. If the Fed wanted to help them ease out of
these trades, they would have been BUYING dollars, not selling them. I
obviously have no idea whether the fed did this or not, but if they did, it
didn't do much good. The dollar got hammered last week and the Tiger hedge
fund lost $2 billion on Wednesday alone converting their dollars into yen.
I don't see much manipulation in that.
The real question is why have the hedge funds suddenly turned so sour on
this trade? Is it possible they think the worst is over in Asia and the yen
will begin to appreciate soon based on the fundamentals?
Just something to think about...
Bruce
>In thirty years of trading I don't think I have seen such blantant
>market manipulation as occured in the last two days. Wednesday and
>Thursday.
>
>In discussing these markets with other traders the concensus is that it
>looked like the Fed and the Treasury was in the market selling dollars,
>bonds and the S&P and buying yen. The only thing that we could conclude
>was that they were operating and manipulating the markets so that LTCM
>and other large hedge funds (cronies) could unwind there positions
>without the major losses that the funds were exposed too.
>
>This is not a true fact, but just an observation on my part.
>
>Lamont Cranston
> "who knows what evil lurks"
>
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