Crosscurrents all around and outrageous predictions!

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Today’s Links

This year’s set of Saxo Outrageous Predictions is now out! The year 2026 will inevitably shape up in crazy ways, the predictions are a series of stabs at the kind of outrageousness the year ahead could deliver. Also available as a PDF.

The FX Trader I penned yesterday, chiefly focusing on USDJPY and JPY dynamics, but also a bit on EURUSD (which is testing above the key 1.1650+ area as I am writing this

My former colleague Peter Garnry weighs in with three key takeaways for investors from the life and career of Warren Buffett after having read one of his biographies. Great perspectives, as always.

Endgame Macro ponders the implications of this push by the Dells in their $6.x billion giveaway to establish savings account for all newborn Americans in the coming few years, a move echoed by US Treasury Secretary Bessent recently. Is this a backdoor to encouraging a savings mentality, with some portion of those savings forced into treasuries?

Say what - a cure for HIV? Would be expensive to do for everyone with the disease, but this is remarkable.

Again, Mike Green’s post on the true poverty threshold where life begins to get a bit easier for a middle class family is gaining enormous attention and is worth a ready if you haven’t seen it already. This will continue to drive populist politics - also from the left, as we saw with Zohran Mamdani’s victory in the NYC mayoral race. There is also a follow up post countering the criticism and negative feedback.

Chart of the Day - The big regime shift in USDJPY

I have covered this quite a bit on the podcast, but just to illustrate it in today’s post below: we have seen en entirely new regime shift in USDJPY over the last couple of months. USDJPY used to correlate quite closely for long periods with the direction of US longer treasury yields, the theory being that lower yields compressed the yield differentials to Japan’s yields and discouraged carry trading. Now we have long Japanese yields running to the upside while US yields are stable (multi-trillion dollar question - are US yields stable because market knows it wouldn’t take much for the Fed to intervene, so why bother to be a bond vigilante if you get a bit intervention slap in the face just as the going gets good?) The yen going down while long JGB yields go up is theoretically an “emerging market dynamic”. This chart is to illustrate, not to predict, but tracking this correlation and any shifts in it may be critical for sensing that something new is afoot and the JPY can rally (like the fact that the Eurozone and the US are really in the same boat eventually, while the UK has been nervously grappling with the same dynamics in its new budget - time will tell whether those efforts are credible.) I do notice that the last few days have seen JPY going sideways in the crosses and even gaining on the US dollar despite the extension higher in Japanese yields - a sign or too early?