The Yen Carry Trade Unwind: A Looming Financial Shock and the Opportunity It Presents
There’s something stirring beneath the surface of the global financial system. You can’t see it in the headlines. You won’t find it on your CommSec homepage. But it’s there—quiet, monstrous, and ready to burst.
And when it does?
It could trigger the most devastating financial event of this century. Bigger than COVID. Bigger than the GFC. We’re talking full-blown Great Depression territory.
That might sound dramatic. But stick with me, because this isn’t doomsaying. It’s pattern recognition. It’s history rhyming. It’s spotting the rickety scaffolding propping up the global economy—and understanding what happens when the wind picks up.
This story isn’t about inflation or AI or bond yields or Biden or Trump.
This is about a trade. One trade. A trade so big, so lopsided, and so globally entangled that it could ripple through every asset class on Earth.
It’s called the yen carry trade.
You probably don’t think about it much—if you’ve ever even heard of it. But it’s one of the foundational forces behind modern markets. And it’s starting to wobble.
Before we dive into how it works, how it could unwind, and how you might actually profit from it, let’s start by setting the mood.
Stock Market Correction 2025: Guide to Navigating the Sell-Off
In Case You Missed It...
Unless you've been living under a rock or binge-watching your favourite series non-stop, you've probably noticed your portfolio looks a bit worse for wear lately. Global stock markets, including our beloved ASX, have taken a significant tumble.
The S&P 500 is now firmly in correction territory, down more than 10%, tech stocks are being hit hardest, and volatility has surged like an adrenaline junkie jumping from a plane.
It's time to sit up and pay attention because these moves scream risk and opportunity in the same breath. It gets confusing out there. We'll get into the key indicators to watch and how we'll know if this is turning around or if the pain is just beginning.
But first, let's get into exactly what's happening so we know which developments we need to watch most closely.
Why the Stock Market is Falling: Interest Rates, Inflation, and Trump's Tariffs
Markets are freaking out for a few solid reasons. Central banks, especially the Fed, are still playing tough on interest rates, signalling ‘higher for longer’ isn't just a catchy slogan.
Gone are the good old days of Draghi's 'Whatever it takes'. We're in upside-down land now.
CBA is Too Expensive: Time to Reevaluate?
The Commonwealth Bank of Australia (ASX: CBA) is the undisputed heavyweight champion of ASX bank stocks. But in the last twelve months we’ve seen its valuation become unhinged from reality.
CBA shares have surged 60% in just over a year.
And for what?
Selling the same mortgages and skimming the same interest margins? There’s no growth story here. Just a bubble inflating before our eyes.
After the recent 1H FY25 result update, CBA shares fell over 11% in 7 trading days. While the price has since stabilised, the fall is a warning shot for CBA holders. The correction? This could just be the warm-up act.
The sharks are circling and it’s time to sit up and pay attention.
CBA’s recent share price decline wasn’t out of the blue. The meteoric rise in valuation was dizzying, bizarre and unwarranted.
To be clear, CBA is not in financial strife. Far from it.
The result was solid, with 4.7% growth in year-on-year revenue and Earnings Per Share (EPS) up 6.6% to $3.08. The Net Interest Margin (NIM) expanded 2 basis points to 2.08%. That’s the interest margin that the bank achieves between what it borrows and what it lends.
DeepSeek, Nvidia, and the Robotic Gold Rush: How AI is Changing the World
One of the biggest technological revolutions of all time is about to be unleashed in a big way.
Robots aren’t just knocking at the door. They’re already in the house, rummaging through the fridge and taking selfies with our smartphones.
For decades, a robotic future has held great promise. A promise that's never quite been delivered. Confined to repetitive roles in mega-factories, they’ve failed to evolve past single-use cases.
Robots that can cook your dinner, clean the gutters and diagnose your illnesses have always been just around the corner. But that’s about to change.
We're leaving the age of limited niche robotics.
And entering the age of mass adaptable robotics.
This revolution promises to upend entire industries. Including some that might not be in front of mind, like food and real estate. We’ll get to these opportunities and why right now is the time to be positioning for this mammoth change.
But first, we must address the question of ‘Why Now?’
The Spark that Ignited the Fire
We need to address the missing piece of the puzzle to answer that burning question.
So, what's been missing?
The hardware is all there. We've got the actuators, joints, ligaments, circuit boards, chips and sensors.
Don’t Miss This Explosive REITs Trade Setting Up Right Now
It's time to get excited about REITs again.
It's not the talk of the town yet. But pretty soon, you'll be hearing about the magic of Real Estate Investment Trusts REITs.
Of course, when your Uber driver talks about it, it'll be time to sell.
Smart punters will spot this trade coming and position early. They'll have made the trade and will step out of that Uber ride with a smug, self-congratulatory smile.
The REIT trade is coming. It's undeniable and unstoppable.
You see, it all comes down to basic math.
The market is expecting interest rates to start falling again this year. That means lower debt cost and lower comparative investment yields. That's a double whammy that could get REITs soaring again.
But the path of interest rates is never guaranteed.
World events could throw us curveballs. Inflation, unemployment and geopolitics leave their dirty fingerprints over these decisions.
We'll examine exactly why this trade could play out and some ways that savvy traders might play it. But first, you might be wondering what the hell REITs are and what interest rates have to do with anything.
So, let's address that first.
NVDA Meltdown is a Warning Shot for Big Tech Investors
Nvidia (NASDAQ:NVDA) has had a rough couple of days in the share market, down 22% in just a couple of days. The whole AI sector is down with it. This isn’t just about one company—Nvidia’s fall matters because of its outsized role in the AI economy and its massive weighting in the NASDAQ index - about 9%.
Its chips power everything from data centres to autonomous vehicles, and when its valuation wobbles, it shakes confidence in the entire ecosystem. In addition to this, its reliance on China for growth and the rising competition from Chinese chipmakers are a recipe for sector-wide turmoil.
NVDA has boomed on the back of the rise of cryptocurrency and AI. It's been one of the most hyped and heavily overvalued stocks for several years.
And it's consistently validated those valuations with astronomical growth.
It's hard to find a better success story for the past decade. Needless to say, it attracts attention when we see such a massive fall.
So, what the hell just happened? Is this the start of the next market meltdown, or just another bump in the road for growth stocks?
The Markets IQ 2025 Predictions
It's that time of year again. Prediction season!
Every year, like clockwork, the financial world dons its festive hats and indulges in the annual farce of market predictions.
Analysts, influencers, and self-proclaimed "gurus" roll out forecasts that range from hilariously overconfident to outright absurd. The clowns of the digital circus throw out numbers and narratives designed not to inform, but to grab your attention and generate clicks.
Let's jump on the bandwagon and put forth our predictions for 2025. It's a short list, so strap in.
1. Most predictions for 2025 will be proven wrong, and the so called prophetic finance guru's will instead focus in on the 2 in 10 that played out Almost as predicted in an attempt to save face.
2. The earth will continue to spin and revolve around the sun.
That's it. A short list.
Why Most Predictions Are Garbage
Nearly all predictions are wrong. Anyone who bases their strategy on them is setting themselves up for failure.
If you see investment research firms peddling their "Top 10 Picks for 2025," be skeptical. These firms often feel compelled to stick with losing ideas to save face, even when it’s clear the market has moved on.
Will Syria Boom or Bust? All Eyes on al-Jolani
The Syrian Government’s collapse is a geopolitical earthquake. Years of civil war, sanctions, and isolation have shattered the old regime, leaving a power vacuum—and one burning question:
What (and who) will rise from the ashes?
Syria’s new government is a wildcard.
Will it be inclusive and stable, or will it lean hard into sectarianism, risking further fragmentation?
A moderate coalition could unlock international investment, reviving the economy and easing Syria’s humanitarian nightmare. But if extremists take the reins, it’s a recipe for chaos—fueling tensions with Israel, empowering Iran, and sparking yet another U.S.-Russia proxy war.
Each outcome carries ripples for the region, from Lebanon’s fragile peace to Israel’s security concerns and Iran’s strategic positioning.
For investors, the type of government matters. Stability opens doors for reconstruction, agriculture, and infrastructure opportunities. Chaos slams them shut.
Syria’s collapse doesn’t just change Syria—it could shift the entire balance of the Middle East.
Abu Mohammed al-Jolani is the leader of Hayat Tahrir al-Sham (HTS) - the rebel group that toppled the regime. He has a past steeped in extreme Islamist views. But is that still his stance?
Boring to Brilliant: ASX's Automotive Winner From Trump’s Tariff Tantrum
Trump is Back Baby!
Not to toot our own horn, but TheMarketsIQ called his return just before the election here. That's right. We were the only ones.
OK. Enough hyperbole.
The result wasn't entirely surprising. As we mentioned, "...the best indication of a Trump victory is the betting odds. Polymarket has Trump with a 57.6% chance of victory."
If you want to see what people value, watch how they spend their money. And what better use case than election betting. The polls indicated a closely contested election.
Fake poll! Sad!
We found out in 2016 how wrong the polls are. The only surprise here is that we are still talking about them as if they mean something.
Well the Trump return has thrown the markets into a spin. We're all scrambling to position for the best winners and trying to drop the losers as elegantly as possible. No small feat, given the big change agenda we're facing.
Of all the winners and losers, we've got an established and profitable ASX player that could be one of the biggest beneficiaries. We'll talk about how that could play out, but before we get to that, let's set the scene.
The Birth of the Cyborg: Humanity Augmented by AI and Robotics
We’re living on the brink of one of the most transformative leaps in human evolution: the merging of human capabilities with AI and robotics. This isn’t just the stuff of sci-fi anymore. Picture a future where we don’t just work with tech but actually become part of it.
In this post, we'll dive into the possibilities of humanity augmented with AI and Robotics, who’s driving the innovation, and how investors might position themselves as this future becomes reality.
As great investors, we aren’t just looking at what’s happening around us right now. We are looking at the future for what will be.
AI might be one of the most under-appreciated themes in investing in recent years. It’s bigger than the computers. It’s the next level up. If computers turned our productivity from a 1 to a 2, the combination of AI and robotics has the potential to make it a 10.
This could be transformative not only for how and where we work, but also how we live, how we run our societies, and how countries interact on the global stage.
Trump is Back Baby!
As the election looms closer, it’s beginning to feel like Trump is gearing up to reclaim power in the land of guns, fast food and Hollywood.
Instead of debating whether Trump is the coolest dude since Jesus or the reincarnation of Hitler, let’s focus on what a Trump victory could mean for the financial markets and how you can position yourself to profit.
The policy agenda’s of Trump and Harris are almost polar opposite on many issues. It’s easy to see in gulf between their two agendas just how populist and extreme politics is in the US right now.
On top of positioning for particular policy outcomes, keep in mind that there is currently a heightened chance of civil unrest around the election. That could mean demonstrations, fighting, further assassination attempts and even attempted coups.
While we don’t want to unnecessarily stoke the flames of division, it’s worth keeping these potential scenario’s in mind. Temperatures are running hot!
No matter who you want to win this election, if in fact you care at all, it’s important to look at both possibilities objectively as to what they mean for your investments.
Put the emotions aside.