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you would be better off buying stocks that benefit from that scenario and or shorting ones that dont. alot less commisions and you can win on both sides even if you are wrong as markets have inherent rising tendencies.

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Ray, i believe you have your signals crossed here.

when you have a view, the object is to execute that view as precisely as possible. you do not want to mix in other things like generally rising markets (ie risk premia that can be collected from being long stocks) or indirect bets via stocks that could rise on the strengthening yen (those who have proportionally large revenue streams from japan but listed in the US etc.)

if you have a view that the yen will strengthen against the dollar, your best bet is to execute that view as preciesely as possible relative to your entire portfolio.

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we have been holding inflation under control and that cant hold forever. and in the sometimes near future we will have a push to strengthen the dollar

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this is a view that US interest rates will rise as inflation picks up if i understand your thought correctly. that interest rate increase will provide strength to the dollar vis a vis its trading partners.

but, when you look at the yen/dollar relationship (or JPY/NZD or JPY/AUS ) you see that there is a possible underpricing that is far larger than can be implied by interest rate differentials as there are retail investors (and hedge funds and others) in japan (and elsewhere) that borrow in yen and invest elsewhere (carry trade).

when this flow reverses, it can be overwhelming even if the dollar strengthens int he spot market due to higher rates.

it may not make sense that the flows will pour into yen while the dollar rates rise but it does make sense to take your positions int he markets to most accurately reflect your views.

according to your post, you should be short US eurodollar futures (or short treasuries) and long JPYvsUSD.

Barron