Much pixel and ink has been spilled the ‘potential’ winners and losers in such an evolving game, but as Bloomberg notes, there has been one winner in the last 10 years each time the world has fretted over “currency wars”.As fear (and actuality) of currency wars flares, the USD has borne the brunt of the buying. From 2004′s JPYtervention to Mantega’s 2010 comments and each time in between, when competitive devaluation is on the world’s lips, then the USD is implicitly bid as the currency du jour is offered to any and every willing carry trade riderthere is. The trouble is – for the lowly US investor -each time the USD is bid, so the US equity market has hit an FX-translated earnings hump and fallen back. So while talking heads will exaggerate the nominal performance of Japanese and British equity markets as their currencies free-fall, perhaps the US investor should be careful what they wish for.

As the world’s reserve currency, the effect of a devaluation of a non-reserve currency (i.e. everything else) is implicitly to put upward buying pressure on the USD…