why-the-carry-trade-is-dead

Why the carry trade is dead

Volatility caused by the subprime mess is here to stay, which means the end of the carry trade, says Calyon, but the crisis could be good news for the US dollar.
Opinion seems absolutely divided on how failing subprime mortgages will affect markets. One day Jim Cramer is having a nervous breakdown on CNBC and the next weÆre being assured by President Bush that the economy is fundamentally strong. Confused yet

A recent research report by Calyon û The DevilÆs Advocate Is volatility back to stay û weighs up these two points of view and tries to pick out where, between the two positions, the truth most likely lies and what the consequences will be for the foreign exchange market.

Pessimists point to a vicious circle that could spin out of control the falling value of toxic subprime assets will trigger the sale of healthy assets...
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