You Should Have Just Gone To The Bar.
Generally speaking, this week’s theme (reflation back on in the U.S. as stocks, the dollar, and yields all rise in tandem) held, as there was no news “bigly” enough to change the narrative.
Generally speaking, this week’s theme (reflation back on in the U.S. as stocks, the dollar, and yields all rise in tandem) held, as there was no news “bigly” enough to change the narrative.
“Probably nothing.”
It was, poignantly, a Captain Picard moment.
Well, here’s hoping this week lives up to last week…
Ok, well this was an interesting week…
Listen, there is a non-negligible chance that you have unwittingly sowed the seeds of this
“If volatility is no longer predictable, the “short-vol†strategies used by hedge funds, pension funds and institutional investors—and available through exchange-traded products, too—are riskier than their advocates suggest.”
“In the same way a boxer who drops his guard runs a risk of being knocked out, complacent markets are facing a potentially painful encounter with reality.”
Remember “Investigating The Market’s ‘Nightmare Scenario’”? Of course you don’t. That post is from May
Fresh off releasing a 28-page report on the low vol. regime called “The Upside Of Boring,” Goldman is out on Wednesday asking an important question: “Are Vol. Selling Strategies Crowded?”Â
“Complacency has moral hazard inscribed into it. It encourages bad behavior and penalizing dissent – there is a negative carry for not joining the crowd, which further reinforces bad behavior.”
Right, so one thing people are becoming increasingly concerned about is the extent to which
Hedging is so last … ummm… decade?
“Around major political events over the past year implied vol has usually spiked close to the event given late positioning, as being long vol has been a negative carry trade. In the week after these events vol has fallen materially as the events have turned out to be less negative for markets than feared.”
” The problem is, market pricing notwithstanding, nerves remain frayed. And markets may find that short-term volatility, in both directions, remains higher than is comfortable for most people.”
All aboard the geopolitical risk train! It took one Brexit, one Trump, a close call
Last week in “How To Exploit The Passive Herd With One Simple Strategy,” we highlighted
If you frequent these pages, you’re well acquainted with the concept of passive investing and its rise
Needless to say, the focus Thursday will be on the GOP proposal to repeal and
“The market didn’t collapse. It went down. In the scheme of life, this is nothing. On the other hand, death by a thousand cuts has to be acknowledged at some point. “
“It is not yet clear whether this warrants a tactically more defensive stance on credit. But volatility should be higher and we should see more days like this.”
“Depending on the interplay of politics and policy — degree of political resolve and the Fed actions — we could see two distinct paths of resolution of the existing tensions in the mid- or long-run. “
Earlier today, we noted that the correlation between implied vol and equities is breaking down
“Investing is macro and macro is geopolitics. If you don’t get that, you’re going to be perpetually behind the curve going forward.
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