Roger Nusbaum submits: On Tuesday I put up a post about the yen. I noted that the carry trade has been very popular and that some point the yen would get stronger against the high yielders, I was not trying to make a call on the yen so much as point out that if the yen gets stronger it will hit and maybe hurt a lot of things.
Later that night, Wednesday morning down under, Australia reported a weak inflation number which some are saying takes a hike by the RBA (Reserve Bank of Oz) off the table in February. A big chunk of the report being weak is attributable to the price of oil, so stay tuned on that one.
The point of this follow up is to point out a few obvious things. A strong yen, whether it happens or not, is a threat to quite a few themes (a repeat from Tuesday). If you are going to invest beyond SPY, EFA and AGG it behooves you to know what threatens the themes you have chosen to own.
If the yen is one thing that threatens your holdings, it is mine, then you should know that USD/JPY at 120 or higher is expensive (in dollar terms) relative to the last few years and so some sort of correction should not be a surprise which is what I was saying on Tuesday.
Some things like this are a little easier to take measure of than some other things. You can't possibly account for everything that might come a long but you can get your arms around some of them.