You wouldn’t know it from looking at any market-based measures of volatility, but 2017 was a hugely consequential year. I assume that goes without saying.
But the survey wasn’t all rainbows and sunshine.
Obviously, nothing could go wrong here.
What happens over the weekend no longer remains confined to the weekend.
Nobody strike a match.
Geopolitics is back in the spotlight to start the week.
Yes, “a central feature” of the prevailing order (or maybe “disorder” is better) is chaotic uncertainty – and a “central feature” of markets is suppressed vol.
“This is really just one manifestation of the more earthly, you can’t fight city hall. A twist in a post-vigilante world, which can’t bear not to believe that the authorities will deliver what our financial market investing thesis requires, while at the same time being utterly incompetent.”
This kind of complacency is in the face of multiple flashpoints and powder kegs is “unwelcome.”
“When asked their worst trades this year, they mostly cited buying volatility, credit protection, or equity puts.”
After all, “shouldn’t greater uncertainty about key economic policy issues lead to a larger dispersion of likely potential outcomes for companies?”
“There’s real danger but at the same time, the central figures are so laughable that it’s difficult to accept it as reality”…
“All this combines to suggest a volatile fourth quarter. Year-end themes remain elusive.”
“We would characterize existing political risks as of the run-of-the-mill variety that investors always face and a far cry from the high-stakes political events of the past several quarters (events that markets navigated with aplomb.”
“This is an environment that is bearish for volatility. It fosters further complacency and encourages continued vol selling.”