Chart Check (“There Are Only Two Ways This Corrects Itself”)

Remember these charts?

fxvolequityvol

(Goldman)

What you’re looking at there, in plain English, is the discrepancy between FX vol and equity vol As you can see, it’s high (an understatement) across markets.

Well have a look at the discrepancy between rates vol and equity vol:

ratesvsequity

(Deutsche Bank)

See any similarities there?

There are only two ways that this corrects itself and one of them is bad for your stocks…

 

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