Bears Crying Wolf And China As Machiavelli (Revisited)

“When asked their worst trades this year, they mostly cited buying volatility, credit protection, or equity puts.”


The Great Disconnect: 5 Reasons Why Volatility Is Detached From ‘Chaotic Uncertainty’

After all, “shouldn’t greater uncertainty about key economic policy issues lead to a larger dispersion of likely potential outcomes for companies?”

The Austin Powers World.

“There’s real danger but at the same time, the central figures are so laughable that it’s difficult to accept it as reality”…

‘Maybe Volatility Is The Answer.’

“All this combines to suggest a volatile fourth quarter. Year-end themes remain elusive.”

‘A Fly In The Ointment’ But Nothing To Worry About, Apparently…

“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.”

The Noisy Status Quo

“This is an environment that is bearish for volatility. It fosters further complacency and encourages continued vol selling.”

Trader: ‘People Are Really Unsettled About Not Having A Clue’

“If there’s one theme running through many of the conversations I’ve had this week, it’s that people are really unsettled about not having a clue where asset prices are going. Every move is portrayed as obvious, meaningful and sustainable–until it’s not.”

‘Believe Me.’

What could go wrong?

Investors Are Scared To Death Of Geopolitics – So They’re Long Stocks And EM

And yet true to form in a world where policymakers have turned everyone from macro managers to Target employees into vol. sellers and carry traders…

Monsters Under The Bed.

“To some extent the market’s resilience is justified; in other cases, however, it looks like a case of when rather than if potential shocks get priced in.”

It’s Hard To Quit.

Because then you’ll be actively contributing to the vol. spike (by selling assets or letting them roll off the balance sheet) and passively contributing to it as well by removing the “put” that incentivizes investors to buy dips and suppress volatility.

The Storm, Manufactured Existential Crises, And Competitive Games

If you’re reading this, you’re probably in the investment industry, or at least have an interest in financial markets. If you’re in the investment industry or in the financial markets, you like to win. So you’re not going to like my answer.

We play. And we lose.

The Selloff That Never Came: ‘Of Politics And Pullbacks’

One of the defining characteristics of the ongoing risk rally over the past 14 months has been its remarkable resilience in the face of epochal political shifts and a world at war. Brexit, Trump, the near-miss in France with Marine Le Pen – all of those events had the potential to do lasting damage to…

Don’t Dig Yourself A ‘Hole’: Full Week Ahead Preview

Ok, so strap in, because this promises to be an interesting week. August has proven to be the month that risk assets finally took notice of the exceptionally precarious geopolitical backdrop. Risk assets have reacted unfavorably to the combination of rising tensions on the Korean peninsula and the seemingly terminal decline of the Trump administration. As…

‘Playing With Fire’ – Full Week Ahead Preview

“Deterrence counts on the rationality of the opponents. The build-up of mutual threats and the shows of force in the past weeks have unsettled markets, with risk assets and high-beta currencies underperforming, and it is likely to continue.”