t is beginning to look that way. The signs are not yet shouted from the rooftops, but they are accumulating with the kind of quiet insistence that tends to precede louder declarations. As we noted in our last letter, we remain persuaded that the bear market in commodities— and the mirror-image boom in high-flying technology stocks—are not merely coincidental phenomena, but rather two sides of the same curious coin: the global “carry trade.” The term, coined by Lee, Lee, and Coldiron in their prescient book The Rise of Carry, refers to a structure in which the world borrows low and lends high—not merely in currency markets, but in equities, bonds, and, crucially, in the asset allocation preferences of investors writ large.

If the theory holds water—and we think it does—it follows that the immense run-up in mega-cap growth stocks, and the protracted languishing of commodity-related equities over the past decade and a half, are inextricably linked. And if that’s true, then it stands to reason that the unraveling of one side of the trade may, at long last, bring about the unraveling of the other.

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