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The Death of the Carry Trade
“State support for Northern Rock already exceeds Britain’s transport budget and could soon surpass the 32 billion pound mark allocated to defence...” The Economist, 11/10/07 , page 70. My own thoughts, like any market prediction, are nothing more then an educated guess, or speculation really. Like any trade, or market, the carry trade will in time reverse under it’s own weight regardless of supply and demand, or in this case interest-rate differentials, when concern tips from return on equity, to return of equity. I believe that time has come. The success of people in the carry trade reminds me of the success of many brokers over the past few years. It has very little to do with market intelligence and much to do with being in the right place, at the right time and being leveraged. Below is a weekly chart of the current 7 year rally in GBPJPY which is as good a proxy as any for the carry trade. Jay Norris 800-971-2154 Senior Market Strategist Brewer Futures Group, Chicago [email][email protected][/email] [url]www.brewerfuturesgroup.com/jnorris/[/url] DISCLAIMER: Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. In no event should the content of this correspondence be construed as an express or an implied promise, guarantee or implication by or from Brewer Futures Group, LLC/ Brewer Investment Group, LLC that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.