Dispatches : Hanging Yen Danger, Big Tech's Valuation Riddle and Bears in the Woods

LONDON, Dec 4 (Reuters) - The Japanese yen is too weak, meaning the gap between the currency’s spot rate and what is consistent with Japan’s economic fundamentals will likely narrow in the coming years. That amplifies risks of a sudden unwind of the yen carry trade.

Some of us still remember October 7, 1998, when USDJPY collapsed from 134 to 120 in one day. The Long-Term Capital Management crisis and Russian government debt default were proximate causes, but the huge yen carry trades were the kindling ready to burn.

And there are plenty of reasons to believe such carry trades are huge today.

NEW YORK, Dec 4 (Reuters Breakingviews) - The highest Big Tech valuations arguably belong to the two companies with the least direct exposure to LLMs, which seems odd given all the talk of an AI stock-market bubble.

The lesson for now seems to be that investors are paying more attention to fundamentals than all of the bubble talk would suggest. It’s a vindication, for now, of Cook’s relatively cautious stance at Apple.

(Reuters) - The numbers suggest bearish investors are roaming freely. Cumulative short interest in companies tracked by the Russell 3000 Index (.RUA), opens new tab grew to $1.4 trillion in mid-November, roughly 20% higher than a year earlier, according to data cruncher S3 Partners. The volume also represents about 3.8% of total market capitalization, double the nadir from early 2023, but below the nearly 5% peak reached in 2021, using LSEG sums.

Those figures, however, in large part reflect a rise in so-called market-neutral strategies, where hedge funds try to balance long and short positions. In other words, the bearish bets are mostly penned in for trades used to offset bullish ones.

Genuine negative nellies who ferret out everything from bloated valuations to fraud are indeed dwindling. The number of hedge funds with a short bias has dropped from more than 50 in 2008 to just 10, while their assets under management roughly halved to less than $4 billion, industry tracker HFR reports.