Submitted by Tyler Durden: With the G-20 (and G-7) concluding with what
appears to be a slap on the wrist and a wink-and-a-nod to Japan, it
seems the game of competitive devaluation will continue. Much pixel and
ink has been spilled the 'potential' winners and losers in such an
evolving game, but as Bloomberg notes, there has been one winner in the
last 10 years each time the world has fretted over "currency wars". As fear (and actuality) of currency wars flares, the USD has borne the brunt of the buying.
From 2004's JPYtervention to Mantega's 2010 comments and each time in
between, when competitive devaluation is on the world's lips, then the
USD is implicitly bid as the currency du jour is offered to any and
every willing carry trade riderthere is. The trouble is - for the lowly
US investor - each time the USD is bid, so the US equity market has hit an FX-translated earnings hump and fallen back.
So while talking heads will exaggerate the nominal performance of
Japanese and British equity markets as their currencies free-fall,
perhaps the US investor should be careful what they wish for.
and each time the "currency war" flare has occurred, this USD strength has led to notable US equity weakness...
so perhaps, all those 'interventionist' hopers should be a little more nervous about the apparent decoupling of the US market - as its rotation unwinds...
Charts: Bloomberg
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