Febby

The yen has long been regarded as a safe haven, but in August, it became the culprit behind significant turmoil in the financial markets. Early in the month, global equities and most G7 currencies plunged, while the yen surged, marking what can be described as the unwinding of the carry trade. Following the U.S. Federal Reserve’s July 31st meeting, initial optimism over potential interest rate cuts quickly soured as investors began to view the move as a sign of underlying economic weakness rather than a stimulus.¹ This shift in sentiment was aggravated by a series of disappointing economic data points, including manufacturing and jobs reports, raising concerns about the overall health of the U.S. economy. As highlighted by AMP’s chief economist Shane Oliver, this shift has reemerged with significant force, particularly in the U.S. markets. As a result, many investors were forced to close their positions, which had largely been financed by selling the yen and buying the dollar, effectively reversing much of the yen’s previous weakness.

Amidst all the chaos and excitement, the question remains on everyone’s mind: has the carry trade fully unwound? Let’s explore this.

The yen carry trade, where investors borrow yen due to the low Japanese interest rates to invest in higher-yielding assets, has long been a popular strategy. However, like most strategies, it has recently undergone a severe stress test. 

Evidence of Unfinding

According to experts from JPMorgan Chase & Co., the unwinding of the yen carry trade is far from over.² Arindam Sandilya, co-head of global FX strategy at JPMorgan, noted that the carry trade unwind within the speculative investing community is only “somewhere between 50%-60% complete.”

This rush has had significant ripple effects across both emerging and developed markets, with currencies like the Mexican peso being particularly hard-hit. The peso, which had been a major beneficiary of carry trade flows, has seen a decline of 6.8% over the past month—the most among major world currencies tracked by Bloomberg. Analysts believe that the technical damage inflicted on portfolios by the sharp move in the yen is not easily undone, suggesting that a full recovery of carry trades to previous levels is unlikely in the near term.

Adding to this perspective, Richard Kelly, head of global strategy at TD Securities, expressed caution, stating that it is still “too early” to declare the end of the carry trade unwind.³ Kelly emphasizes that the yen remains significantly undervalued, suggesting that the unwinding process may continue as the Bank of Japan potentially tightens its monetary policy further. This could lead to additional spillover effects, particularly as interest rate hikes shift in unfavorable directions for carry trades.

Recession Fears Adding Fuel to Fire

The current landscape for carry trades is further complicated by ongoing fears of a U.S. recession, which are now seen as a primary driver of the yen’s recent surge rather than the Japanese rate hikes. According to Taro Kimura, a senior Japan economist, the pace of the yen carry trade unwinding is reminiscent of the rapid reversal seen in 2007 during the onset of the subprime mortgage crisis. The future of the carry trade will likely hinge on the evolution of the U.S. economy and the Federal Reserve’s policy responses.

However, opinions are divided. Some analysts believe that most of the immediate disruption from the yen-funded carry trade unwind has already occurred. These analysts suggest that while the yen is likely to maintain its recent gains, the bulk of the turbulence might be behind us, with carry trades stabilizing in the near future.

Given these developments, it is clear that while significant progress has been made in unwinding yen carry trades, the process is not yet complete. Investors should remain cautious as further adjustments in global markets could continue to unfold.

As the yen carry trade continues to unwind, several factors will shape its future trajectory. Speculation around central bank interventions, such as a potential emergency rate cut by the Federal Reserve, raises questions about further yen strength, which could exacerbate the unwinding process rather than halt it.⁴ Similarly, while Japanese officials might attempt to curb the yen’s rise, past efforts suggest such measures would only slow its appreciation.

The stock market’s performance, particularly in the tech sector, could influence carry trades, but ongoing volatility suggests that pressure may persist. Analysts warn that the selling pressure in the yen carry trade is far from over and that volatility is expected to remain high, especially in emerging markets. Despite some signs of stabilization, opinions vary on whether the worst is behind us. While some believe that the immediate disruption may have passed, others caution that the yen could strengthen further into 2025, keeping investors on edge.

In this uncertain environment, staying vigilant and informed about central bank actions and market developments will be crucial as the carry trade story continues to evolve.

^{1 The Guardian. Share market chaos explained: what’s behind the stock meltdown and will there be a recession?
2 Yahoo! Finance. JPMorgan Says Carry Trade Unraveling Is Only Half Complete
3 CNBC. The big ‘carry trade’ unwind is far from over, strategists warn
4 Charles Schwab. Carry Trade Unwind: Is It Really Over?}

Thus far in 2024, major stock market indices have shown varied performances, reflecting diverse economic conditions globally with western indices performing generally better than emerging market ones. In the U.S., the Dow Jones rose to new highs, while the NASDAQ, and the S&P 500 maintained an upward trajectory, indicating a mix of optimism and sector-specific challenges. European indices like the FTSE 100 and DAX displayed minor movements, suggesting cautious investor sentiment. 

For Emerging Markets (EMs), the scenario is complex with geopolitical tensions and economic resilience influencing performance. The iShares MSCI Emerging Markets ETF (EEM) highlighted long-term underperformance against U.S. markets, but a weakening U.S. dollar and lower valuations offer potential opportunities for long-term investors. Overall, 2024 presents a landscape of cautious optimism in developed markets and a nuanced outlook in EMs, with geopolitical risks still on the rise.

The US continues to play a pivotal role in driving global economic dynamics. According to recent updates from the International Monetary Fund (IMF), the US economy is projected to experience a substantial growth rate of 2.1% in 2024, buoyed by government fiscal measures and robust consumer expenditure. On the other hand, the forecast for the Eurozone has been adjusted downwards to a mere 0.9% growth rate for the same year. China, however, has seen a positive adjustment in its economic growth expectations, now anticipated to see a 4.6% expansion in 2024. Japan, in contrast, is grappling with the dual issues of escalating consumer prices and tepid economic expansion, compounded by stagnant real wages that struggle to match the pace of inflation. Despite these challenges, the NIKKEI index recently reached an all-time high, marking a significant milestone after 34 years since its last peak in 1989.

The outlook for critical minerals and precious metals in 2024 and beyond remains positive given several factors. Demand for critical minerals like lithium, cobalt, nickel, and copper is expected to rise sharply due to their essential role in renewable energy technologies and electric vehicles, highlighting a pressing need for increased exploration, development, and recycling efforts to meet this demand and mitigate supply constraints and geopolitical risks​​. 

Precious metals, particularly silver and platinum, are poised for appreciation, driven by easing monetary policies, industrial demand, and their indispensable use in green technologies and fuel cells. Gold, while expected to see moderate price increases, faces a shift in demand dynamics, with investment demand softening and official demand stabilizing at higher levels​​.

The economic slowdown in some regions poses challenges but also sets the stage for a modest recovery that could influence metal prices and demand. The overarching trend towards sustainability and electrification underpins the long-term outlook for these resources, with the mining sector at a critical juncture to balance economic performance with environmental and social governance considerations​​​​. As the industry navigates through these complexities, strategic investments and innovations in mining and metal extraction technologies are essential to ensure a sustainable supply chain that can support the global transition to a cleaner, more sustainable future.

As 2024 progresses, it appears to hold more promise than 2023, particularly with the ongoing US elections and the uncertain future of the Biden Administration’s efforts for re-election. In this context, Global One Media provides essential support for companies looking to expand their reach globally. Our team, comprised of experienced marketers and digital strategists, focuses on connecting your brand with a diverse audience worldwide. We specialize in developing and implementing targeted digital marketing strategies that aim to communicate your message effectively. Engaging with Global One Media means accessing a wealth of knowledge in digital marketing and investor relations to support your project’s growth. Contact us to learn how we can assist in achieving your goals with a more measured approach.

The Toronto Stock Exchange Venture Exchange (TSXV) is Canada’s junior listings market, providing a platform for small and mid-sized companies to access capital. Recognized globally, the TSXV serves as a gateway for growth-stage companies, particularly in sectors like mining, energy, and technology. This exchange is essential for investors looking to diversify their portfolios with potential high-growth investments.

Investing in the TSXV can be attractive for several reasons:

1. Diversity of Sectors: The TSXV lists companies across various industries, offering unique investment opportunities.
2. Potential for High Growth: Many companies on the TSXV are in their early stages, presenting the possibility of significant returns.
3. Access to Emerging Markets: The TSXV includes companies operating globally, providing exposure to emerging markets.

The TSX Venture Exchange (TSXV), located in Canada, is distinctive from other stock exchanges due to several key characteristics:

1. Focus on Small and Medium Enterprises (SMEs): TSXV is tailored for small and medium-sized enterprises. It provides these companies with a platform to access venture capital, which is often more challenging to secure through larger exchanges.
2. Junior Listings: The exchange is well-known for its significant number of junior listings, particularly in sectors like mining, oil and gas, and technology. These are often early-stage companies with a higher risk/higher reward profile.
3. Tiered System: TSXV operates a unique two-tiered system. Tier 1 is for more advanced companies with more significant financial and resource requirements. Tier 2 is for smaller or early-stage companies. This structure helps tailor the regulatory and listing requirements to the size and stage of the company.
4. Graduation to TSX: The TSXV serves as a feeder system to the Toronto Stock Exchange (TSX). Companies that grow and meet higher listing standards often “graduate” to the TSX. This pathway provides a clear route for growth and increased exposure.
5. Regulatory Environment: The TSXV, like other Canadian exchanges, operates under a different regulatory environment than exchanges in the U.S. or Europe. This includes specific rules around financing, corporate governance, and disclosure that are designed to be more accommodating for smaller companies.
6. Investor Base: The exchange has a unique investor base interested in venture-stage investments. This includes both retail and institutional investors who are accustomed to the higher risk and potentially higher returns of such investments.
7. Global Reach: Although it’s a Canadian exchange, TSXV has a global reach, attracting international companies and investors, particularly those interested in resource-based sectors.
8. Access to Capital: TSXV provides easier access to capital for small-cap companies compared to larger exchanges, which often have more stringent listing criteria and requirements.

These qualities make the TSX Venture Exchange an attractive option for smaller, growth-oriented companies seeking capital and exposure, and investors seeking exposure to companies with high growth potential, especially in specific sectors like natural resources and technology.

Canadian investors have several avenues to invest in the TSX Venture Exchange (TSXV). Here are some of those methods.

1. Direct Stock Purchase through Brokerage Accounts: The most common method is to buy stocks directly through a brokerage account. Canadians can choose from various brokers, including traditional full-service brokers and online discount brokers. Examples include TD Direct Investing, RBC Direct Investing, Scotia iTRADE, BMO InvestorLine, Questrade, and Wealthsimple Trade.
2. Exchange-Traded Funds (ETFs): ETFs that focus on Canadian small-cap or venture stocks can include companies listed on the TSXV. ETFs are traded like stocks and can be purchased through a brokerage account.
3. Mutual Funds: There are mutual funds that invest in small-cap Canadian companies, which may include TSXV-listed companies. These can be purchased through financial institutions, investment advisors, or directly from mutual fund companies.
4. Managed Portfolios or Investment Advisory Services: Investors can use managed portfolio services or investment advisors who can make investments in TSXV-listed companies on their behalf.
5. Tax-Advantaged Accounts: Investments in the TSXV can be held in tax-advantaged accounts like Tax-Free Savings Accounts (TFSAs) or Registered Retirement Savings Plans (RRSPs). These accounts offer tax benefits and can be used to purchase stocks, ETFs, and mutual funds that include TSXV investments.
6. Robo-Advisors: Some robo-advisors may include TSXV-listed stocks in their portfolios, depending on the investor’s risk profile and investment strategy.
7. Private Placements: Accredited investors can participate in private placements offered by companies on the TSXV. This involves directly purchasing shares from the company, usually before they are offered to the public.
8. Stock Options and Derivatives: For more experienced investors, options and other derivatives based on TSXV stocks can be a method of investment, albeit an indirect one.

Each of these methods varies in terms of the level of active management required, risk exposure, potential returns, and liquidity. Investors should consider their investment goals, risk tolerance, and investment knowledge when choosing the method that best suits their needs. Additionally, consulting with a financial advisor can provide personalized advice and guidance.

International investors have several options to invest in the TSX Venture Exchange (TSXV), although the methods may vary depending on their location and the regulations of their home countries. Here are some common ways international investors can invest in the TSXV:

1. International Brokerage Accounts: Use a brokerage account that offers access to international markets, including Canada. Brokers like Interactive Brokers, Charles Schwab, and Fidelity are known to provide access to Canadian markets for international clients. Some Canadian brokers allow non-residents to open accounts as well. This might involve more complex registration processes and adherence to both Canadian and the investor’s home country’s regulations.
2. Global Trading Platforms: Platforms that cater to global investors often include access to multiple stock exchanges, including the TSXV. These platforms can be more convenient for managing a diversified international portfolio.
3. Mutual Funds and Exchange-Traded Funds (ETFs): Invest in international mutual funds or ETFs that include Canadian small-cap or venture companies, some of which may be listed on the TSXV. These funds can be accessed through local brokers or financial institutions in the investor’s home country.
4. Asset Managers and Investment Firms: Hiring an asset manager or an investment firm that specializes in Canadian or international markets can be an option. They can manage investments on your behalf, including those in the TSXV.
5. Partnerships or Joint Ventures: For larger or institutional investors, forming partnerships or joint ventures with Canadian entities can be a pathway to invest in ventures listed on the TSXV.
6. Private Placements: Participate in private placements offered by TSXV-listed companies. This is typically available to accredited or institutional investors and involves directly purchasing shares from the company.
7. ADR (American Depository Receipts): If a TSXV-listed company has ADRs traded in the United States, international investors can invest through these ADRs, which are available through many international brokerage accounts.

The TSX Venture Exchange (TSXV) in Canada is a specialized market primarily for Small and Medium Enterprises (SMEs) and early-stage companies, particularly in sectors like mining, oil and gas, and technology. Characterized by its unique two-tiered system, the TSXV caters to companies at different stages of growth, providing a pathway for eventual graduation to the larger Toronto Stock Exchange (TSX). This exchange appeals to a diverse investor base, familiar with the high-risk, high-reward nature of venture-stage investments. While it offers smaller companies easier access to capital, investors should approach the TSXV with caution, balancing their quest for high-growth opportunities with prudent risk management strategies to succeed in this dynamic investment landscape.

2023 was a challenging year for everyone’s wallets. Fortunately, there is a reason for cautious optimism this 2024 with news that inflation is dropping¹ and interest rates may shortly fall.²

Fresh from starting from a brand new year slate, there are several financial goals to pursue in 2024 for current and aspiring money savers. We’ve rounded up seven money-saving pointers to jumpstart your savings journey and into the path of better financial health. The following tips could both safeguard and expand your existing funds significantly throughout the year.

Don’t count on a sudden miracle that you’ll get rich overnight, establish your plans for financial success. For reference, some people’s financial goals are to have enough financial security to avoid stressing about money. While others aim to save enough money to afford a dream vacation or to buy a house. 

It’s gonna take some time planning so start listing and prioritizing your financial aspirations and then create a roadmap for achieving them. A well-known goal-setting technique is the SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) Criteria:

Source: Mindtools.com

Without goals to strive for, your financial journey is likely to be less exciting and aimless so start your year right by making plans today.

The road to a better financial standing is tough but fulfilling. So make sure your roadmap is realistic. To ensure that you can consistently monitor your money-saving progress, it is important to create a budget. A simple budgeting framework to try is the 50/30/20 rule³:

• 50% of your income for needs (housing, food, transportation, etc.)
• 30% of your income for wants (travel, entertainment, etc.)
• 20% of your income to savings and debt repayment (examples include creating an emergency fund or saving for retirement)

By having a budget, you’ll better understand how much you earn and spend in a specific time period. This allows you to pinpoint where you should cut your expenses. Learning how to budget, especially with little to no experience, takes time and practice but it will be worth it in the end.

One of the first steps you take when you start saving money is to build an emergency fund, especially in today’s volatile and unpredictable economy. Setting money aside for unplanned financial setbacks ensures that you will be able to recover quicker and get back on track to reaching your financial goals.

A common suggestion is to have enough cash to cover three to six months of expenses.⁴ Also, you can consider keeping your emergency money in a separate bank account. This distinguishes the money set for emergencies from those allocated for regular expenses and savings goals.

If you haven’t already, it is time to catch up with the digital age and explore different money-saving apps. These include financial goal-setting, automated saving, and expense tracker apps that can make your money-saving journey in 2024 less of a hassle. In particular, the best budgeting apps monitor your savings, investments, debts, and/or credit score.

A fad nowadays is digital consumers looking to save on their online shopping expenses by availing of digital coupons or e-coupons. These are available nowadays on a store’s website, digital newsletters, digital coupon apps, coupon sites, and browser add-ons.⁵

There’s always a chance that you could lose your main source of income and the impact can be severe to your financial health. A solution to provide yourself a safety net is to diversify your sources of income. 

A common way is to build your passive income through making investments. The income can come from your portfolio’s investment mix of individual stocks and bonds, mutual funds, and exchange-traded funds. Investments can help you accumulate wealth over time. You could boost your net worth and financial freedom by allowing your investments to grow.

If you can, find a financial accountability partner. They should be a trusted person who can provide you with the accountability and support needed to stay consistent with your money-saving habits. Having a partner to share your financial goals with gives you a sense of shared responsibility and mutual motivation. It’s a plus if your partner is well-versed in financial planning because they can offer insights, identify potential challenges, and help with budgeting and growing your money.

The financial landscape is always changing. Keeping yourself informed and updated with what’s going on in banks, financial markets, and the global economy equips you with the knowledge to make wiser financial decisions. The best ways to stay updated with all financial news happening worldwide include checking credible news sites and listening to reputable podcasts. You can start being your own financial guru by simply installing financial news apps on your smartphone to receive real-time news alerts. Just be sure to develop a consistent routine of staying informed.

Empower yourself with more financial knowledge by reading the articles found in Global One Media’s blog.

^{1  World Bank Blog. Is the great inflation scare over? The case for cautious optimism.
2  CBS News. Federal Reserve leaves interest rate unchanged, but hints at cuts for 2024.
3  NerdWallet. Budgeting 101: How to Budget Money.
4  Securian Financial. 5 steps to building an emergency fund
5  Microsoft. Understanding digital coupons and e-coupons}