The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis

by Tim Lee, Jamie Lee, Kevin Coldiron

Overview

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.

Product Details

ISBN-13:	9781260458404
Publisher:	McGraw Hill LLC
Publication date:	12/17/2019
Pages:	240
Sales rank:	546,705
Product dimensions:	6.20(w) x 9.00(h) x 1.10(d)

About the Author

Tim Lee is the founder of the independent economics consultancy pi Economics, serving financial institutions from hedge funds to traditional asset managers. Previously he worked for global asset managers including GT Management and Invesco in Hong Kong and London. He is the author of the highly regarded Economics for Professional Investors (2nd edition, 1998) and his commentaries and analysis have been widely quoted in the media. Tim was educated at Magdalene College, Cambridge University.


Jamie Lee works for investment guru and philanthropist Jeremy Grantham, focusing on environmental research and volatility trading. He previously worked as economist and analyst for asset management companies in Boston and London. Jamie holds a B.A. in Mathematics and English from Dartmouth College.




Kevin Coldiron teaches the Masters in Financial Engineering course at Berkeley (Haas Business School), having previously had a very successful career in asset management with Barclays Global Investors and the hedge fund Algert Coldiron, which he co-founded.

Table of Contents

Figures and Tables

Preface and Acknowledgments

1 Introduction—The Nature of Carry

2 Currency Carry Trades and Their Role in the Global Economy

3 Carry, Leverage, and Credit

4 Dimensions of Carry and Its Profitability as an Investment Strategy

5 The Agents of Carry

6 The Fundamental Nature of the Carry Regime

7 The Monetary Ramifications of the Carry Regime

8 Carry, Financial Bubbles, and the Business Cycle

9 The Foundation of Carry in the Structure of Volatility

10 Does the Carry Regime Have to Exist?

11 Carry Is Synonymous with Power

12 The Globalization of Carry

13 Beyond the Vanishing Point

Index