The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis
The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis
Protect yourself from the next financial meltdown with this game-changing primer on financial markets, the economy—and the meteoric rise of carry.
The financial shelves are filled with books that explain how popular carry trading has become in recent years. But none has revealed just how significant a role it plays in the global economy—until now.
A groundbreaking book sure to leave its mark in the canon of investing literature, The Rise of Carry explains how carry trading has virtually shaped the global economic picture—one of decaying economic growth, recurring crises, wealth disparity, and, in too many places, social and political upheaval. The authors explain how carry trades work—particularly in the currency and stock markets—and provide a compelling case for how carry trades have come to dominate the entire global business cycle. They provide thorough analyses of critical but often overlooked topics and issues, including:
•The active role stock prices play in causing recessions—as opposed to the common belief that recessions cause price crashes
•The real driving force behind financial asset prices
•The ways that carry, volatility selling, leverage, liquidity, and profitability affect the business cycle
•How positive returns to carry over time are related to market volatility—and how central bank policies have supercharged these returns
Simply put, carry trading is now the primary determinant of the global business cycle—a pattern of long, steady but unspectacular expansions punctuated by catastrophic crises.
The Rise of Carry provides foundational knowledge and expert insights you need to protect yourself from what have come to be common market upheavals—as well as the next major crisis.
Great Read on Central Bank Support for Carry Trades
The authors do a very good job of distilling what is arguably a complex topic in contemporary finance into a consumable tome. Fundamental knoweldge of optionality and implied volatility is a good background. In-depth knowledge of derivatives is not required. It starts with simple examples of currency carry trades and explores in depth the ultimate carry trade recipient - S&P 500. There is a great exploration of how central banks in pursuit of financial stability promote and exacerbate carry trades. Additionally, I learend how financial repression promoting carry trades increases the ‘moneyness’ of certain securities. This book is like reading an indepth exploration of financial headlines. There is a chapter or two near the end where the tone changes and it takes on a political philosophical bent and that is the reason for 4.5 stars versus all 5.