Michael Cowan: The Hidden $20 Trillion Global Carry Trade that will Unwind Everything

For nearly three decades, a powerful, yet often invisible, financial mechanism has acted as the subterranean engine of global capital markets: The Japanese Yen Carry Trade… This trade—a complex borrowing strategy stretching back to the 1990s—is the linchpin supporting trillions of dollars in global assets, including significant portions of the US Treasury market and the soaring valuations of the S&P 500. But the cornerstone of this foundation has just cracked. Recent, dramatic shifts have signaled that this multi-trillion-dollar carry trade is beginning to unwind, threatening not just a market correction, but a widespread financial upheaval potentially worse than the crisis…