The admonition, "If it sounds too good to be true, it probably is" applies to market indicators as well as investments. For any given development in financial affairs, it is always too easy to find something that correlates well. Spurious correlation is the bane of the data analyst; the trick is to make sure indicators have some defensible, not merely plausible, fundamental explanation behind them.

Carry trades meet this test, including the yen carry trade (see "A closer look at the carry trade", June 2007), the U.S. dollar carry trade ("The short, awful life of the dollar carry trade", August 2008) or the Swiss franc carry trade ("Franc-ly, my dear, I don’ t give a carry," September 2008). If the unwinding of the great global credit bubble defined the downturn in various asset markets from mid-2007 onward, what do you think propelled the inflation of that credit bubble?