Making money in British pound and Japanese yen

(MENAFN- Khaleej Times) I am now convinced the Group of Twenty central bankers reached a secret Shanghai Accord to drive down the value of the US dollar akin to the Plaza Accords under President Reagan in 1985. This explains why the Draghi ECB refused to project any more deposit rate cuts driving up the euro above 1.13. The Bank of Japan did no "shock and awe easing" despite 10 successive months of lower inflation (Kuroda's two per cent inflation target is the Johny Joker of Abenomics) driving up the yen from 120 to 112 in 2016. China's PBOC slashed China bank reserve ratios but stabilised the yuan fix thus allowing Asian currencies to rise from the dead. Above all the Federal Reserve's FOMC abandoned its constitutional dual mandate adopted global risk as a triple mandate and cut 2016 projected rate hikes from four to two (the Fed dot plot) despite a white hot US labour market and rising wage inflation. As the Supertramp album went crisis what crisis?

Dr Janet Yellen has now risen to the glorious summit of her own incompetence by citing global risks at a time when Brent crude is up 45 per cent since late January and the Volatility Index has plunged from 25 to 13.60. If financial conditions had really tanked since the FOMC December rate hike how come gold is up almost $180 an ounce for 2016? This is a classic signal of easy money not tight money. Three top Fed officials (Lacker Bullard and Williams) have now revolted against Aunty Janet and her "data dependent politically independent" Santa Claus believing Federal Reserve. The world monetary system is once again on the precipice of disaster due to the policy blunders of a Fed chair as it was in 2007 when Helicopter ben assured us "subprime will be contained" and in 2000 when Maestro Greenspan assured us that deregulating Wall Street would reduce systemic risk a point Richard "Gorilla" Fuld chairman/CEO of Lehman Brothers duly noted.

The Chicago Fed Funds futures market has cut its projections on future rates driving down the ten year US Treasury note yield to 1.82 per cent. Dr Yellen has done her best to talk down interest rates in the best tradition of toady politics and centrally planned (remember Goslan in the late Sovietski Soyuz?) central banking. Now Wall Street assures short rates will remain "lower for longer" while the King Dollar trend is as dead as a dodo. Wall Street is dead wrong!

So my thoughts turn to the currencies of Dai Nippon (yen) and the sceptered isle (sterling). Japan is at a fiscal monetary and demographic impasse. Public debt/GDP is 228 per cent. Inflation is a mere 0.4 per cent. The adult diaper market is bigger than the baby diaper market and Hokkaido is full of villages inhabited only be retirees. Abenomics is at a dead end. So Kuroda-san will do what he did in October 2014. A shock and awe monetary ease. Abe will announce a fiscal stimulus and Big Bang reforms. A trillion yen in life insurer/trust/pension fund money will scramble to exit negative rates in Marounuchi after the fiscal year at the same time as the Chicago bond vigilantes remind the Fed chair about data dependence. The endgame? Dollar/yen at 118 by September. The divine wind (kamikaze) will emerge from Mount Fuji and vindicate the yen bears.

I want to sell sterling (cable) at 1.44 since June 23 is a long time away. 1916 is remembered in history for the slaughter on the Sonnme Dublin's Easter Uprising and Colonel Lawrence's Arab revolt in the desert. Will 2016 be remembered for Brexit? The London bookies give one third odds. The sterling option market spikes volatility to 16.5 per cent the highest since RBS Lloyds HBOS and Barclays imploded in 2008. The City's grandees tremble as they should since Brexit means the end of both the UK and the EU just as the Battle of Berlin meant the end of both the British empire and the Third Reich now known as Merkelistan.

Geopolitical binary events cannot be predicted as the Scottish referendum or even the last UK general election proved. The Tory eurosceptics are again in regicide mode as Iain Duncan Smith's exit from the Cabinet suggests. Euro/sterling has fallen seven per cent in 2016 for rational reasons. If Brexit happens cable will drop like a stone (as the euro will be leprosy too) down to 1.25. No Brexit euro/sterling will surge 12 per cent. So the macro stars dear Brutus are aligned for D Day on June 23.