The US dollar has weakened after the US and Japan jointly intervened to prop up the Japanese yen. Jared Blikre has been following the implications of this. And Jared, we've been talking about this in our meetings over the past couple of days.

Glad to be back here.

Yes. Yeah, exactly. We have this we have this discussion periodically. Um this is a little bit unusual because the US has been so public about its intervention. Scott Bessent a one-time currency trader himself

Right under the fire.

Yes, he knows a bit about this.

who once put some pressure on the Japanese is now doing the opposite. So, for regular investors, what why is this important?

Yeah, so the US dollar, so the US dollar, um, in the US, we pay a higher rate of interest than the Japanese do on their longer-term bonds. All the way from the two-year, all the way to to the 10-year and the 30-year. And so what people do in this situation, it's called the basis trade, sometimes or the carry trade. Carry trade more when we're dealing with uh multiple governments, but they will borrow in the yen, and they will take that money and they will invest it in the higher yielding US

assets. And that works for a long time. It's like printing money, but it's also like picking up dimes in front of a steamroller and every once in a while, things get a little bit out of whack, something moves too quickly and you get a dislocation and then you get steamrolled. You get mushed. Um so on the Wi-Fi interactive, I have a long-term chart of the US dollar versus the Japanese Yen. And what you're going to see, this goes back to the beginning of the century, but somewhere around the global financial

Yes.

s.

crisis, that's when we saw this low in the US dollar versus the yen. We have seen the US dollar strengthen for the most part over this last decade and a few years there. Now, this at the very right top here, you can see a little bit of a downturn. That is the intervention we're talking about here. It looks bigger on this five-day chart and it is kind of a big deal because as you said, the US go doesn't get involved in these matters every day. Last time they did this was 2011. That was part

of the Fukushima nuclear disaster. That had nothing to do with financial markets. But the last time the US supported an intervention by the Japanese authorities in this particular direction was 1998. So, there's a this doesn't happen every day. So, what you're seeing here, we got some big downdrafts in the US dollar for the went versus the Yen. That means uh when it's going down, the Yen is strengthening and the US dollar is declining or is weakening. And we also saw some little

downdrafts in here. This happened over multiple days. We don't have confirmation that it happened Thursday, although that was the big one and that was a downdraft. But we do have confirmation that the US was helping the Japanese on Friday. and you can see since Monday, we've drifted up a little. So the US dollars strengthen a little bit. The Yen has weakened a little bit. But let me show you on a heat map basis what the currency what the Japanese Yen has done versus these other currencies. And I switched it so that this is the Japanese

Japanese Yen first versus the US dollar, the Argentine Peso, um India, China, Brazil, all these markets and you can see green means the Yen is getting stronger. So over the last four days, this isn't just a US phenomenon, uh the Yen has been getting stronger. Now you might say, why does this matter to US investor? Because guess what? As you pointed out earlier Julie, the S&P 500 in the US just hit another record high this morning. That was its first in two months. The world is shrugging its

shoulders right now. But there is a little bit of a concern because you US yields on the long end have been going higher. And that's because of inflation, that's because of uh the money, that's because of the US debt. And so if US yields keep going higher, well, that could that could spell trouble for US stocks, but we're not quite there yet.

Well, and the concern was if the Yen kept going in that direction, that perhaps the Japanese government would start to sell some of its treasury holdings, which then would further put pressure. In fact, Scott Besson the US Treasury Secretary was on CNBC this morning and he said, we will continue to support Japan, we'll do what it what is necessary.

Yep.

Everybody's on the same page. So that's what you want to hear right now.

Yes. Yes, I suppose so. Although there have been some critics about the US stepping in in such a fashion.

Yes. well, because it is intervention and we're supposed to have free markets. You're always going to get that kind of push back. But the fact is is that Japanese rates have been held to very low levels for years. They are now just catching up and it's a it's a tight it's a high wire act. You got to be careful and there's going to be missteps on either side. So things are okay right now.

For the bottom line.

All right. Thank you Jared. Appreciate it.