A Vote For The Yen Carry Trade

We’ve followed Polymarket for over a year now.

There’s something about real people, betting in real-time about events that can tell you more than what the news headlines say.

These bets, which have sometimes amounted to millions of dollars, tend to send a clear signal. It’s a key reason why many members of the Grey Swan Investment Fraternity were able to forecast President Trump’s electoral college win last year.

However, Polymarket betters have finally got one bet wrong – Japan’s new Prime Minister:

Turn Your Images On

Wagers on Polymarket didn’t see Japan’s conservative party pull out its win over the weekend.
(Source: Polymarket)

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Time will tell how often Polymarket registers big misses. It’s still early days for the event-betting industry online. That said, we kind of liked the betting odds as a forecasting tool. No longer, eh?

~ Addison

P.S. Grey Swan Live! continues Thursday at 2 PM ET.

This week’s guest? You’re gonna love him. He’s a supply-side economist who has a decades-long track record of predicting future tech trends. We’re looking forward to picking his brain on the opportunities in AI today – and an eye on how much further the AI bubble can blow.

Who do you think it is? Send your guess to Feedback@GreySwanFraternity.com

We’ll send another hint this afternoon, with the big reveal tomorrow. But don’t wait to sign up and become a member – it just takes a few minutes.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

We’ve followed Polymarket for over a year now.

There’s something about real people, betting in real-time about events that can tell you more than what the news headlines say.

However, Polymarket betters have finally got one bet wrong – Japan’s new Prime Minister:

Turn Your Images On

Wagers on Polymarket didn’t see Japan’s conservative party pull out its win over the weekend.
(Source: Polymarket)

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

~ Addison

P.S. Grey Swan Live! continues Thursday at 2 PM ET.

Who do you think it is? Send your guess to Feedback@GreySwanFraternity.com

We’ll send another hint this afternoon, with the big reveal tomorrow. But don’t wait to sign up and become a member – it just takes a few minutes.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Here we sit — investors, analysts, retirees, accountants, even a few masochistic economists — gathered beneath the leafless monetary tree, rehearsing our lines as we wait for Jerome Powell to step onstage and tell us what the future means.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

With U.S. stocks trading at about 24 times forward earnings, plans for capital growth have to go off without a hitch. Given the billions of dollars in commitments by AI companies, financing to the hilt on debt, the most realistic outcome is a hitch.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.

As copper flowed into the United States, LME inventories thinned and backwardation steepened. Higher U.S. pricing, tariff protection, and lower political risk made American warehouses the most attractive destination for metal. Each new shipment strengthened the spread.

The arbitrage, once triggered, became self-reinforcing. Traders were not participating in theory; they were responding to the physical incentives in front of them.

The United States had quietly become the marginal buyer of the world’s most important industrial metal. China, long the gravitational center of global copper demand, found itself on the outside.