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Monday Market Movement - Yen Still Climbing Vs Dollar

|Includes: Baker Hughes, a GE company (BHGE), EWJ, HAL, UGA, USO, UUP, XOM

One again the BOJ does nothing over the weekend.

That's put many, many traders on the wrong side of the strong Dollar/weak Yen bet and it's also pushed the Nikkei back to our long line at 16,000, which is where we expect support from the BOJ - whether overt or covert. As I said in a Bloomberg interview last week:

I think 105 is a line that will be defended by the BOJ in whatever way they can, for as long as they can and the 16,000 line is also being defended at the moment so it's great fun to play in the Futures but as soon as we get to around 18,000 or 116 on the Yen, we flip to shorting the Nikkei and long on the Yen (short USD/JPY) because both those levels are unrealistic, no matter how hard the BOJ tries to push us over those lines.

The BOJ's problem is they can't fight the constant flow of money coming into Japan from Asian investors looking for safe-havens to park their cash. What are the alternatives? As bad as Japan is, it's less scary than their home countries so investors tend to buy Euros (Francs, etc.), Dollars and Yen but, as a reserve currency, the Yen is just 2.5% of the Global Float (Dollar 63%, Euro 24%) yes, when people are allocating cash - they tend to put a disproportionately high percentage into Yen (vis a vis allocating by reserve status) and that is what causes the Yen to be too strong, no matter how much the BOJ tries to weaken it.

Now Japan has been placed on on official US Government watch list for currency manipulation and that's forcing the BOJ to tread caustiously before making any additional currency moves and, as I said in another interview last week (hasn't aired yet), we're not expecting any real action from the BOJ until after the upcoming G7 meeting.

Without specific action to weaken the Yen, we can expect it to gether strength as money flows into Japan from other Asian markets, where their problems are even worse than Japan's 250% debt to GDP ratio. The Yen is 106.65 to the Dollar at the moment and most of Asia (and Europe) are closed for May Day holidays and Japan will be closed tomorrow through Thursday so don't expect big action until Friday when anything can happen.

With our Fed staying cautious, our Government doesn't want Japan circumventing the Fed and strenghening the Dollar, which puts downward pressure on our stocks and commodities just when the oil lobby is getting gas back over $2 a gallon - the BOJ should know better than to go against the wishes of the US oil cartel, who have driven gasoline prices up 25% since February - despite the FACT that gasoline stockpiles are at new record highs - 10% higher than they were in February:

The less we use, the more we pay - IT'S AMAZING!!! A total scam is what it is with prices totally disconnected from supply and demand. Not only has our demand fallen off a cliff but 4M barrels a week of our demand (over 500,000 barrels a day) is also FAKE!!! because we are EXPORTING petroleum products to other countries (in addition to natural gas):

YOU pay more money at the pump, 0.50/gallon more than you did 3 months ago because YOU don't care enough to write to your Congressman and DEMAND action be taken to rein in the BLATANT manipulation of prices by the US Energy Cartel. Who is the US energy cartel? It's the same "7 Sisters" who have always dominated the oil industry, they just don't hold semi-annual meetings (well, not in public, anyway). The average car uses 750 gallons of gas per year so 0.50 per gallon is costing you $375 per car that's as much money as our entire Education Budget and a $120Bn boost in revenues to our beloved 7 Sisters Cartel (and their OPEC brothers).

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Disclosure: I am/we are long USO, UNG, BHI.

Additional disclosure: Positions as indicated but subject to RAPIDLY change (currently mainly cash and an otherwise slightly bearish mix of long and short positions - see previous posts for other trade ideas). Positions mentioned here have been previously discussed at - a Membership site teaching winning stock, options & futures trading, portfolio management skills and income-producing strategies to investors like you.