FPA’s Steve Romick comments on his recent investments. FPA is joining the Kyle Bass trade on Japan widow-marker. He says that the bet on Japan interest rates will be not a successful one, adding that unlike Greece, Japan can control its interest rates.
Kyle Bass was down with 30 per cent in 1 month alone because of his bet on Japanese Government bonds.
According to Steve Romick, Japan is worse than the United States. He is of the opinion that Japan’s fiscal problems will soon come to existence. He comments on the purchasing of derivative instruments which are supposed to be profitable in the case of the Japanese Yen weakening.
Moreover, Romick thinks that the potential payoff is likely to be quite asymmetrical and substantial if the interest rates or the exchange rates revert to historical levels. He, however, comments that the USA has a vague notion of the time when Japan will be in the headlines, each and every instrument which the country has purchased has a multi-year-life.