The Largest Trade on the Planet Could Be About to Unwind

By Michael Salvatore June 18, 2026

Listen to the audio version of this article (generated by AI).

In This Digest:

Forget the Fed… the real market-moving news is out of Tokyo

The “financializing of everything” theme is just getting started

AI chokepoints are the gift that keeps on giving

All eyes are on the Fed, but the real market-moving news is out of Tokyo…

Yesterday, the Federal Reserve did what most folks expected.

In the first meeting led by new Fed Chairman Kevin Warsh, it left interest rates unchanged in a range of 3.50% to 3.75%.

Stocks traded lower as the market came to terms with the idea of higher rates before the end of the year. The S&P 500 closed down 1.2%, and the tech-heavy Nasdaq 100 fell 1%.

President Trump appointed Warsh to the Fed with a specific mission: bring down interest rates. So that fact that the Fed left rates where they are is significant. It tells investors that the current annual pace of Consumer Price Inflation of 4.2% is too high for even the new Warsh-led Fed. (For context, the Fed’s target rate is 2%.)

But our master options trader, Jeff Clark, says the real market-moving news came out of Tokyo.

You see, on Tuesday, Japan’s central bank raised its own key interest rate to 1%, the highest level there since 1995.

That matters because, for years, big institutional traders have borrowed Japanese yen at rock-bottom rates and used that cheap money to buy higher-returning stocks and bonds in the U.S.

It’s called the yen carry trade. And Jeff calls it the “largest trade on the planet” that’s rapidly set to unwind.

It works beautifully when Japan’s interest rates are low. The yen stays weak, the borrowed money stays cheap, and the U.S. stocks and bonds it flows into keep climbing.

But a rate hike in Japan tends to strengthen the yen. And as Jeff told his subscribers: “When the yen rallies the carry trade goes into reverse.”

As Jeff showed readers of our Market Minute trading e-letter, we got a preview of that reversal in the summer of 2024. The yen rallied about 10% in roughly three weeks – and the Nasdaq 100 fell 12% over that same stretch as the carry trade unwound.

The yen has been sliding versus the dollar since April 2025 – the same month U.S. stocks bottomed and began their climb to today’s record highs.

So with Japan now in rate-hiking mode, Jeff’s keeping a close eye on a higher yen weighing on tech stocks.

He’s not calling for a crash tomorrow. But if the yen starts to climb in the days and weeks ahead, history says it could spell trouble for U.S. stocks.

If you aren’t following Jeff Clark’s insights in Market Minute, go here to sign up. It’s free and full of trading ideas guided by a trading veteran with more than 40 years’ experience under his belt.

Wall Street wants you to bet on everything, but this is what you should buy…

Until recently, most investors stuck to a short menu: stocks, bonds, ETFs, maybe a futures contract if they were feeling fancy.

Soon, options came along to give investors leverage. Then crypto added a whole new asset class to speculate on.

But today, Wall Street has figured out a way for you to bet on… almost anything.

You can bet on who will win the World Cup… what the first words out of Kevin Warsh’s mouth will be at the press conference… which movies will top the box office… how many jobs the economy added last month… and even whether or not the U.S. will reach a permanent ceasefire with Iran.

Events like these are now regularly traded like financial contracts. If you’ve kept up with professional sports for the past year, the ads for these prediction markets platforms have been impossible to miss.

Andy and Landon Swan – the brothers behind our MegaTrends advisory – have been tracking this “financialization of everything” theme for months. And they’ve been urging their subscribers to position themselves to profit.

The numbers back them up.

Their newest recommendation to our MegaTrends subscribers saw its prediction-market revenue jump more than fourfold in a single year.

It’s processed more betting contracts in 2026 than it handled in all of 2025 – before the World Cup kicked off last week.

And it gets even crazier. Increasingly, people aren’t even placing these bets themselves. They’re handing the job to artificial intelligence – training AI agents to scan the odds and place wagers for them automatically.

It’s a faster, more automated, more volatile market than the one most of us grew up with. And it’s not slowing down.

So how do you profit from this trend?

Own the gatekeepers.

Every one of these bets has to travel through regulated financial plumbing – an exchange to list the contract, a clearinghouse to settle it, and a data feed to price it.

That plumbing is owned by a handful of public companies that get paid on the volume, no matter who wins the wager.

Four stand out:

Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, which has committed up to $2 billion to prediction-market platform Polymarket

Cboe Global Markets (CBOE), the options-exchange operator building its own event-contract infrastructure

Nasdaq (NDAQ), whose exchange technology and index data underpin much of this new trading

And CME Group (CME), the futures giant whose clearing and data settle event contracts for betting partners like DraftKings and FanDuel.

That last one is the most interesting today.

The Swans’ Social Heat Score – a real-time read on whether consumer interest in a company is rising or fading, drawn from millions of social media posts and web searches – has CME sitting at 73.8 out of 100. That’s firmly in bullish territory.

But the stock tells a different story. CME is down about 20% from its high of $329.16 back in March, and it’s trading near its lowest level of the past year.

CME stands out as a contrarian opportunity right now. Consumers are bullish, as shown by its high Social Heat Score, but investors are bearish. Add it to your watchlist as a way to buy into this theme while it’s still on sale.

The AI chokepoints theme is the gift that keeps on giving…

As we’ve been covering in these pages, big tech firms are set to spend $1 trillion on the AI datacenter buildout next year. It’s the largest sustained surge in spending in the U.S. since the end of World War II.

But here’s the part the headlines miss: The money is moving faster than the physical world can absorb it.

And we’re seeing more confirmation of this in the top forecasts from our AI-powered trading model, Predictive Alpha. Take a look…

The three largest expected gains on the list all come from companies that are solving these chokepoints:

Nebius Group (NBIS) rents out the heavy-duty computing power that companies use to run AI. Our model forecasts a 22.9% move higher by July 17 — the biggest forecast on the board – with a historical target accuracy rate of 89%.

Western Digital (WDC) makes the data-storage drives that warehouse the enormous amounts of information AI systems feed on. Predictive Alpha sees it climbing nearly 17% by July 17. And the model has called WDC’s forecasts correctly, down to the penny, nearly 90% of the time in the past.

Veeco Instruments (VECO) builds the machines that manufacture advanced computer chips. Our model forecasts a 9% move by July 17, with a historical accuracy rate of nearly 90%.

Three different chokepoints – storage, computing power, and the equipment that makes the chips – and all three lit up on the same day the broad market fell.

It’s the same logic as the exchange “gatekeepers”: Own the plumbing, not the hype.

If you believe the AI buildout is set to continue – and the $1 trillion in planned spending behind it says it very likely will – these three forecasts give you a data-driven way to play it.

Put Western Digital, Nebius, and Veeco on your watchlist, with NBIS the standout on both expected move and accuracy.

If you’re a paid-up subscriber, pull each one up in TradeSmith Finance and check its full Predictive Alpha forecast and Health signals before you act.

To building wealth beyond measure,

Michael Salvatore

Editor, TradeSmith Daily