>> JAPAN'S YEN, THAT'S HIT A NEW 34 YEAR LOW. AND OF COURSE, THE U.S. DOLLAR HAS BEEN PRETTY STRONG LATELY. INFLATION SHOWING NO SIGNS ARE COMING DOWN TO SYSEM PLEA. LET'S BRING ADAM BUTTON CHIEF CURRENCY ANALYST AT FOREX ALLY ITEM. >> WE'RE GOING TO GET OUT OF IN A SECOND INTERESTINGLY, OF COURSE, TAKE THE YEN IS WEAK AGAINST THE BACKGROUND OF JAPAN, GRADUALLY LETTING INTEREST RATES RISE. BUT THERE'S THE NUMBER OF YEN. IT'LL COST YOU TO BUY A U.S. DOLLAR JOINS US NOW. THANKS VERY MUCH FOR COMING ON THE SHOW. THANKS FOR HAVING ME SO THE JAPANESE HAVE MOVED TO THAT BORROWING COSTS RISE OF BEST, BUT STILL THE YEN WEAKENING WHEELS. OBVIOUSLY, THEIR YIELDS ARE STILL FANTASTIC. A >> THAT'S REALLY IT TO ME. YOU HAVE AN OPPORTUNITY TO BORROW AT LESS THAN ONE PERCENT IN JAPAN AND INVEST IN THE ENTIRE HORIZON OF OF THE WORLD. REALLY 4, 5, 6, 7%, AND REALLY RISK-FREE RATES. AND THAT'S JUST CREATED A TIDAL WAVE OF MONEY. THAT'S LEADING JAPAN. AND AS THE YEN WEAKENS, THE TRADE BECOMES MORE AND MORE COMPELLING WITHOUT ANY SORT OF RATE HIKES ARE MEANINGFUL RATE HIKES IN JAPAN, THERE ISN'T MUCH THAT THEY CAN DO TO STOP IT RIGHT NOW. SHORT OF INTERVENING. >> IT DOESN'T WORRY THE I GUESS IT MAKES THEIR EXPORTS MORE COMPETITIVE. >> THAT SAID THERE, THEY'RE TRYING TO EMPHASIZE A LITTLE BIT OF THE UPSIDE IN IT. BUT POLITICAL PRESSURE IS GROWING AND YOU KNOW, WE'RE SEEING THAT SORT OF DAY AFTER DAY. THEY'RE GETTING QUESTIONS AND JUST THIS WEEK, SORT OF THE LAST LEG DOWN IN THE YEN WAS INTERVIEWED, OFFICIALS BEING ASKED OKAY, YOU NEED TO INTERVENE AND THEY CAME OUT AND SAID, LISTEN, THIS IS REALLY FUNDAMENTALLY DRIVEN. THE U.S. IS STRONG. WE HAVE A LOW INFLATION, WE DON'T REALLY THINK THIS IS THE LITTLE TO DO THAT. AND REALLY THAT JUST GAVE THE MARKET ANOTHER GREEN LIGHT TO PUSH HIGHER. AND WE JUST IN MAKING NEW 34 YEAR LOWS IN THE END EVERY DAY, REALLY FOR THE LAST MONTHS. AND IT'S A IT'S A TOUGH WIN. THE FIGHT RIGHT NOW. >> THE SO IS THERE A GIANT GLOBAL CARRY TRADE PEOPLE BORROWING MONEY IN JAPAN AND INVESTING ISN'T HIGHER RETURNING ASSETS ELSEWHERE. >> THAT'S IT, THAT'S WHAT'S FUELLING IT. AND WE SEE THIS, YOU KNOW, IF YOU GO BACK TO BEFORE THE FINANCIAL CRISIS, IT'S REALLY JUST SORT OF TRICKLE. AND THEN A FLOOD OF MONEY THAT JUST CHASING IT AND DRIVING IT IN FEEDS ON ITSELF A LITTLE BIT. BUT THEN WHEN A RECESSION OR SOME SORT OF DIP IN US, FUNDAMENTALS LIKE INFLATION FALLING AND EVERYONE'S BEEN WAITING FOR. IT'S A RUSH TO THE EXIT IN THE OTHER DIRECTION. SO AT THAT TIME TO REMEMBER THERE WERE DAYS, IT WAS A LOT IS GOING INTO THE KIWI IN THE AUSSIE IN THOSE DAYS, WHICH REELING 7 OR 8%. AND THEN WE HAD DAYS WHERE THEY WERE FALLING 10% IN A SINGLE TO TRADE ON WELL. AND SO THIS IS SORT OF THE NATURE OF THIS TRADE GOES AND GOES AND GOES AND THEN THE BOTTOM FALLS OUT OF IT. WHEN SOMETHING CHANGES. UNFORTUNATELY FOR JAPAN, IT'S BEEN 3 YEARS OF THIS NOW. AND THERE'S NOT A LOT OF SIGNS THAT IT'S ABOUT TO END. >> I'M TRYING THINK OF THE OTHER JAPANESE ARMY, THE JAPANESE BRING IN THEIR ENERGY SO THAT'S GOT TO BE HORRIFIC. AMAZING. KIDS ARE GOING PAN HAS BEEN ABLE TO AVOID THE GLOBAL INFLATION. I MEAN, REALLY HAS BEEN A GLOBAL INFLATION SHOCK AROUND THE WORLD IN JAPAN'S BEEN LOOKING FOR INFLATION FOR THE LAST 25 YEARS. >> AND THIS ALL UNFOLDED REALLY IN A WAY THEY MIGHT HAVE HOPED, BUT INFLATION MAY BE TAKE UP TO 3%, NOT A 6, 7, 8%, IT GOT 2 IN THE REST OF THE WORLD. AND SO THAT'S MADE THE MARKET EVEN MORE CONFIDENT. THAT'S SOMETHING ABOUT JAPAN IS JUST INCAPABLE OF GENERATING INFLATION. IT'S GOING TO MEANINGFULLY RAISES RATES OVER THE MEDIUM OR LONG TERM. >> IT'S SUCH A STRANGE COUNTRY IN A WAY, IS THAT I MEAN, THEY HAVE, THEY'RE ALMOST CRIME FREE, THEY HAVE FARE FREE HEALTH CARE, THEY ARE VERY DIFFERENT FROM LOT OF OTHER NATIONS, BUT A CAR. SIR. WE HAVE A BIG DEMOGRAPHIC PROBLEM. COULD YOU TALK TO US ABOUT THE U.S. CURRENCY? MAYBE WE'LL PUT UP A 10 YEAR CHART FOR THE U.S. DOLLAR IS THE RISING U.S. DOLLAR LATELY, CAUSING PROBLEMS AROUND THE WORLD. >> RACE ISN'T JUST A PROBLEM IN JAPAN ARE STARTING TO SEE PLACES LIKE INDONESIA. A LOT OF THE PEOPLE WHO ARE HEAVY IMPORTERS OF OF COMMODITIES, ESPECIALLY EMERGING MARKETS, THEY'RE STARTING TO FEEL MORE AND MORE OF THE STRAIN FROM THE STRONG U.S. DOLLAR. AND WE KNOW THE STORY, WHY THE DOLLAR STRONG. THE ECONOMY HAS BEEN STRONG. THE U.S. IS RUNNING DEFICIT TO 7% OF GDP. YOU KNOW, RATES STILL LOOK LIKE THEY'RE GOING DOWN ANYTIME SOON OR AS SOON AS WE MIGHT HOLD. AND SO YOU WORRY THAT IT HAS SOME WHERE SOMETHING IS GOING TO BREAK BECAUSE OF HIGH RATES IN THE STRONG U.S. DOLLAR AND NO DAYS LIKE TODAY WHEN WE SEE THE DOLLAR STRENGTHENING FURTHER, THOSE THOSE RISKS, RATCHETING UP SLOWLY. AND SO IT IS A BIG PROBLEM, IT'S A GROWING PROBLEM. THERE WAS A MEETING THIS WEEK BETWEEN JAPANESE AND KOREAN OFFICIALS TRYING TO MAYBE STRATEGIZE TOGETHER. CHINA WOULD ALSO LIKE ITS CURRENCY TO RISE. AND EVEN THE U.S. THERE'S A STORY THIS WEEK, THE TRUMP WANTS TO WEAKEN THE CURRENCY. SO THERE'S A LOT OF ALIGNMENT HERE IN REGION GETTING FX. BUT RIGHT NOW THE FUNDAMENTALS ARE WHAT THEY ARE. >> THAT'S IT IN THE PARTY. JUST HEY BY THE CHINESE, THE CHINESE WOULD LIKE THEIR CURRENCY TO GO UP. >> YES, THAT'S IT. THEY THEY'D IT WITH STEADILY WEAKENED. THEY'VE BEEN LEANING AGAINST YOU AS AN EXPORTING COUNTRY THAT THEY DON'T WANT TO UNDERMINE THEIR OWN CURRENCY. AND THAT'S A LOT OF THAT STRENGTH IN GOLD THAT WE'VE SEEN THIS YEAR HAS BEEN CHINESE CONSUMERS AND INSTITUTIONS. AND OF COURSE, THE CENTRAL BANK FOR DIFFERENT REASONS. BEIGEL. BUT CONSUMERS ARE SEEING THEIR DOLLAR WEAKENED AND THEY'RE LOOKING FOR SOMETHING AND THEY'RE INCREASINGLY TURNING TO GOLD. AND THAT'S BEEN, YOU KNOW, ONE OF THE GREAT STORIES ARE THE ONE OF THE GREAT TRADE SO FAR THIS YEAR. SO ALONG THERE ISN'T MUCH OF THE WORLRLD DOESN'T WANT TO SEE THE U.S. DOLLAR GET MUCH HIGHER. AND I THINK WE'RE PROBABLY IN THE 7TH OR 8TH INNING OF THIS DOLLAR RALLY. BUT IT'S NOT GOING TO TURN UNTIL INFLATION DOES NOT THINK THAT'S COMING SOONER THAN THE MARKET
