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A Perma-Bull Turns Bearish: “I’m Worried”
The discrepancy between FX vol and equity vol is perhaps the most important indicator for markets. That's my story and I'm sticking to it, dammit.
The FX vol/equity vol ratios are near records across markets:
(Goldman)
Or, to visualize it another way, we're seeing nothing in the S&P 500 implied vol term structure. No kink at the front end to reflect Trump policy uncertainty:
(Goldman)
How long can this possibly hold up? Not long, I would contend. Then again, it's held up for longer
“Trump wants to specifically raise taxes on imports from China and Mexico. So, in trade terms, mainly cheap clothes, food and oil, leaving expensive or luxury goods alone. That looks like a focus on eroding the consumer’s purchasing power. The U.S economy depends on the consumer, yet the administration calls the policies pro-growth”
This, in the US economy the consumer is king. Nothing I have heard mentioned as far as policy goes is going to help out the consumer go roaring ahead. You are not going to break 3% growth YoY without them. So where’s this “growth” coming from?
well, if that GDP print is any indication, the answer is nowhere
Question? What is the point of all this? Just to keep going in this direction or what, force these economies to expand, then what, force them again and again? Is their a end game? A better world economy? A more stable and sustainable planet with 7-8 billion (+more coming) population that can’t be stable or sustained. What is it? Take more because I can and give nothing back in return. WHAT? More control of your $$ and or lives. Well their standard bearer is in the right place (for now) as Orange julius cowers the enemy. This status quo thing is nothing more than a ponzi scheme. WHO BENEFITS? Not people who actually pay taxes, we are the suckers in this LITTLE drama. Lots of people know something is wrong but don’t or can’t know what to do about it. What is their end game?