Top Traders Unplugged23 Mar 2022

TTU120: Carry - The Good, the Bad and the Ugly ft. Kevin Coldiron

In this episode, Niels and Rob is joined by Kevin Coldiron, co-author of the book “The Rise of Carry” and lecturer in Asset Management at UC Berkeley, to discuss the use of carry trading as a trading strategy, how it relates to volatility and risk, how carry trading creates market feedback effects, and how that is distinct from feedback created by other strategies, how it can play a role in financial bubbles, whether we are still in a carry regime or transitioning away from it and what comes after.

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In This Episode, we discuss:

The increasing popularity of carry trading and its role in the global economy
The risk and volatility of carry trading, and how it can play a role in financial bubbles
How carry trading creates market feedback effects, and how that is distinct from feedback created by other strategies
The role of liquidity within the carry world
The future of carry

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Episode Timestamps:

00:00 - Intro

02:25 - Introduction to Kevin

05:53 - Background on the co-authors of Kevin’s book

09:43 - Definition of carry trading with examples

13:56 - Volatility vs. risk

23:11 - The role of Volatility in investing

28:27 - Carry trade suppressing volatility

35:55 - Does carry trades play a role in financial bubbles?

41:01 - The current carry regime?

43:38 - Carry in macroeconomics

52:48 - What comes after the carry regime?

01:05:44 - Thanks for listening

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Disclaimer

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