Howdy Lark Traders! This is Lark Digest, bringing you the trading heat like it’s the 4th of July. We’re grilling up seasoned trades and washing them down with thirst-quenching macro news.

Yes, it’s more exciting than it sounds.

Mr.Lark

On today’s menu:

• The Funded Engineer runs into issues 😬 

• Is Japan about to collapse? 🇯🇵 

😬 Funded Engineer Runs Into Issues

Another day and another prop firm drama.

Just when I was about to wind down on my Saturday afternoon and crack open a cold one, I thought I’d give Twitter a quick check.

Turns out, that was dumb.

Before I knew it, two hours had passed, my wife was angry at me, and I still didn’t fully understand what happened with Funded Engineer.

You see, it all started with the following post from Prop Firm Match:

Now, if you’re like me, your recent PTSD from The Funded Trader and other firms getting suspended by Prop Firm Match is leading you to think, “Oh, this is no big deal,” but unfortunately, it is.

You see, Funded Engineer is one of the largest firms in the industry, and its CEO, Tristan, has an incredibly loyal following.

Well, was incredibly loyal.

So, what’s going on here?

1/ HOW IT STARTED

In order to fully understand what’s going on, we need to back up to February 7th, when Funded Enginner was shut off from their tech provider for:

1. Allegedly defrauding them.

2. Misrepresenting payout figures to the public by over $2 million.

That’s Problem #1.

This led to major issues for Funded Engineer, forcing them to scramble and relaunch with a new backend system.

Within a month, they achieved this and announced on March 7th that 95% of accounts had been reissued.

This means they lost roughly a month's worth of sales.

Cue Problem #2.

But just when things started to calm down, their owner was hit with a lawsuit.

We’re now at Problem #3.

2/ PRE-FEBRUARY 7TH = ❌ 

So, now that we’ve set the scene, what actually led to that suspension on Saturday?

On Saturday, the company announced that all traders, regardless of whether they’re already funded or not, will need to start back at Phase 1 if they purchased before February 7th.

Why February 7th?

Because those accounts were purchased under their old tech provider.

This means that if you purchased before February 7th, all of your progress will be erased.

We’re now at Problem #4, in case you’ve lost track.

However, from what we’ve seen online, it looks like:

• Profitable funded accounts will still be paid.

• For those not interested in restarting at Phase 1, there are talks about allowing traders to continue, but a payout cap will be enforced.

3/ WHAT DOES THIS MEAN?

If one thing is certain, by scrolling through some of these Twitter comments, it’s clear that traders hate payout caps.

And I mean, hate.

But frankly, I think there are bigger issues here.

As we always say at Lark, we love competition. It makes everyone better, and we hope the situation is quickly resolved.

Tristan, the Funded Engineer’s CEO, posted on April 7th that there will be “significant tightening” across the industry, and it looks like that foreshadowed this.

The reality is that for most firms, there most certainly needs to be stricter rules.

Any firm, especially new ones, offering:

• 200:1 leverage.

• Cheap and easy challenges.

• Daily/weekly payouts.

Are just a walking red flag ❌ 

Now more than ever, stay safe out there.

👀 Is Japan About To Collapse?

When I started trading in 2016, the Japanese Yen was considered a safe haven.

I mean, have you ever heard of any ground-breaking news or wild economic policy coming out from Japan?

No.

*Well, they did have negative interest rates, but that’s beside the point.*

The point is that those safe-haven days look well behind Japan, and for traders, that’s a major shift.

To cut to the chase, the Yen has been absolutely collapsing against the Dollar.

So, what’s going on here?

1/ Insane debt. The US debt-to-GDP ratio is roughly 120%. Yes, that’s disgusting, but it’s nothing compared to Japan’s 250%. If you thought Americans had a spending problem, compared to Japan, they look like that cheap friend who never offers to pick up the tab.

2/ Impossibly low interest rates. The higher interest rates go, the stronger a currency gets. But if they raise rates, they won’t be able to service the debt. This means Japan is pretty much in an impossible position.

3/ Sell US treasuries? Japan could sell US treasuries to prop up the Yen. But there’s a problem. If they do that, people will buy them because they’re a high-yielding asset. What happens next? The USD gets stronger, and they’re back to square one.

We thought we had a tough job at Lark, but today, we’re happy we don’t work for the Bank of Japan.

We have no idea what will happen next, but we do know that for traders, this represents a massive shift from what has worked for decades.

For years, if you saw bad news, you’d buy the Yen against commodity currencies like the Australian Dollar 🇦🇺, New Zealand Dollar 🇳🇿 or even the Canadian Dollar 🇨🇦 (we’ve got tons of our own problems over here).

But that’s no longer the case.

So if your parents bullied you for trading crypto, saying it's all a scam, it looks like people are catching on to what fiat is really all about…

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