credit Markets

Casino

There's a generalized sense of angst hanging in the thick summer air, but nobody knows quite what to do about it. The absurdities seem to multiply by the day, and now go well beyond the disconnect between markets and the real economy, although that disparity is arguably more glaring than ever. Former trader Richard Breslow reminds us that this cognitive dissonance has been a defining feature of markets for more than a decade. "At first we were confused by it. Then amazed. Periodically incensed", Breslow writes, in his Tuesday missive, noting that eventually "we came to just accept it as the way the system is set up and things are". Market-based measures of volatility became totally disconnected from measures of geopolitical uncertainty during 2015, 2016, and 2017, for example. Even as populism swept across western democracies, threatening to reverse decades of globalization, rates volatility remained moribund and the VIX hit a record low. Note that the chart (below) is monthly, so the highest points on the VIX during, for instance, February 2018’s dramatic spike, don’t appear, but it gets the point across. As Breslow goes on to note, there is no mystery here. Forward guid
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6 comments on “Casino

  1. Emptynester says:

    Money for nothin’ and “chips” for free

  2. D Price says:

    Trumps gambit probably runs the mental note that he deserves a cut of the deal, but oh well that would likely hurt my election chances therefore it goes to the treasury.

  3. I have a hard time believing the Chinese government will simply allow MSFT to snatch TikTok on a deal “brokered” by Trump. That said, I have been surprised by how tame China’s response has been to recent actions by the Trump administration, I can only conclude that the Chinese are happy letting the dog bark louder than usual if it means securing power over Hong Kong. If China allows the US to exercise eminent domain over TilTok after shutting off Huawei from develop markets where do they draw the line? It makes more sense to allow a ban in the US and wait until the election passes to decide if you want to let your biggest tech rival usurp your social media “crown jewel.” No sympathy for TikTok if it gets banned, the Chinese ban a plethora of US companies from their borders, but the risk reward analysis for China on a forced sell of TikTok makes little sense, my bet is it won’t happen.

    • A Pi says:

      Alternative would be to ban TikTok. This is actually a win for China, get paid $50bn for something that could be worth a fraction if they get banned… rinse repeat. Meanwhile US tech companies are not to play the field (neither do they get bought out).

    • Anonymous says:

      The world is really big, US is 400m of 7b population, if not for the soundness of the USD and her past virtuous deeds, US will only warrant 5-10% of China’s attention

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