The Yen Carry Trade

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There's panic on Wall Street and around the world recently, and it's not bad economic news or a terrible earnings report that's at fault. Instead, it's a highly leveraged yen "carry trade" that has led to billions of dollars in selling and liquidations starting in the crypto market on Sunday night.

Here's how the yen carry trade works.

1. Borrow yen at a low interest rate.
2. Convert yen to another currency, often U.S. dollars.
3. Buy assets that yield an interest rate higher than the Yen rate in (1). Ex. U.S. treasuries. 

According to the Motley Fool, if yields and exchange rates don't change, this is a brilliant trade because it is a simple arbitrage that prints money month after month.

They go on to say:  But something has changed. The interest rate on Yen debt is rising; the prior range was 0% to 0.1%, and the Bank of Japan announced a rate increase to 0.25% on Friday, bucking a decade-plus trend of essential zero rates.

Can Ford Sell Overseas?

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Here's the scoop:  "Ford's EcoSport SUV will be sold in more than 60 countries in four years. Currently, it's sold in 10 countries. The Edge will be sold in 40 markets, compared with 16 last year. The most important change might be the beginning of sales of the Escape in China this year."  That's all according to Erich Merkle, Ford's sales analyst.

By ignoring the growing trends of consumers who were downsizing to smaller vehicles and wanting improved gas mileage as fuel prices increased, Detroit automakers ran their businesses into the ground. Those poor decisions culminated in bankruptcies by GM and Chrysler, while Ford escaped by restructuring on the back of its own private loans. Fast-forward to today, and the SUV is a different beast and is beginning to sell again. The more important question for Ford is, can it sell overseas?

Read the entire article:  Can Ford Take SUVs to the Global Market?

China Investigates Sales of U.S. Cars

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China is investigating sales of GM, Ford, and Chrysler vehicles, and the inquiry could lead to higher tariffs for American automakers.

Read more here. Comments are interesting. Do you have any? Let's hear.

Trade War on Solar Products?

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Is the Chinese market open to sufficiently low-cost foreign solar suppliers?

Your guess is as good as mine but to learn more, read this.

Additional resources:

China plans world's largest solar plant

Reuters Summit-China, U.S. to dominate solar market

West vs. China in solar war