Introduces Nigam Arora and asks about the risk of the yen carry trade unwinding given rising BOJ yields.
Molly
Nigam Arora
The risk is real. There's about $1 trillion in the carry trade with high leverage. A small move in yield means a lot due to leverage. On a macro level related to currencies and borrowing, we now have probably the highest risk since 2008.
Asks how exposed the US AI trade is if leveraged funds are forced to unwind, and what the market reaction would be if Japan's rates go up while the Fed eases.
Molly
Nigam Arora
The US AI trade is very, very exposed. We could easily see a 10-20% correction if the carry trade unwinds. Investors should be open to the possibility that as the Fed cuts rates, long-term yields may rise.
Notes Arora's 70% probability for a December cut is below market pricing (~85%) and asks what the market is missing.
Molly
Nigam Arora
The data (inflation ~3%, some employment weakness) doesn't justify cutting rates, but the Fed is likely to cut due to internal dynamics and political pressure.
Pivots to ask if QT ending creates a structural moment for precious metals, particularly silver.
Molly
Nigam Arora
Silver could hit $70 if there is a Fed cut and the statement is not hawkish. Silver is prone to vicious short squeezes.