Thanksgiving is a nice opportunity to step back and look at the big picture of what's going on in the world without getting distracted by the latest headline.
Here is a quick summary of the big macro stories in the world that are actually a matter of some debate and interest.
1. Japan and the yen: On a debt-to-GDP basis, the Japanese government is the world's most indebted. Yet for years, those who have bet against the yen or Japanese Government Bonds have hit a brick wall. But without much fanfare (up until recently) the yen has been weakening, and is now at an 8-month low against the dollar. This comes amid two big developments. One is that Japan is now persistently running monthly trade deficits (contrary to its long standing reputation as an export giant). The other is that the country is about to have an election, where the leading candidate is running on a platform of aggressive inflation targeting and bond buying.
These developments have given Japan uber-bears like Kyle Bass new motivation to make the case that the country is going to have a meltdown.
Most of Wall Street is far more sanguine, but there is no question that the short-yen trade is the hottest thing around.
As SocGen's Kit Juckes put it in his morning note this morning...
There has been no news in USD/JPY, but
the yen is still weakening steadily across the board. That can continue
as yen shorts are put on against other Asian currencies. AUD/JPY and
NZD/JPY can be popular trades that suck in a lot of semi-retail funds.
EUR/JPY has broken sharply higher, too. By mid-December there may be too many yen shorts out there, but we'll worry about that another day.