Volatility

Morgan Stanley: "The Debt Ceiling Worries Us Most"

"Multiple failures in the US to pass healthcare legislation, despite single-party control, raise questions about a whole host of other issues, from the debt ceiling, to the budget, to taxes. The debt ceiling worries us most, given that action may need to be taken within as little as seven weeks..."

One Hedge Fund CIO Is Shocked To Learn The Fed's Model Ignores "The Only Two Things That Matter"

“Wait, that’s not even part of your model?” asked the private sector, imagining itself in the presence of the Fed. “You seriously don’t even consider the crushing weight of the pension avalanche that is bearing down on us? You don’t even take into consideration what’s happening in China?” Silence. “Do you even understand today’s world? Pensions and China are the only two things that matter!" 

"The Swarm Effect": Every Trader Today Has Just Two Choices

"...one faces a choice between two scenarios: 1) A small probability of losing all of your money all at once at an undisclosed time in the future, or 2) A high probability of gradually losing small amounts over an indefinitely long period of time, keeping in mind that persistent small losses over an indefinite time period could lead to large cumulative losses."

El-Erian Exposes The Upside And Downside Of Liquidity-Driven Markets

"The markets' overall sense of 'goldilocks' - not too hot, not too cold - explains much of the gap between buoyant stock indexes and lagging economic and policy fundamentals...What remains more elusive, however, is confidence that this will end up at an enjoyable destination."

Junk Bonds Are Finally Starting To Care About Oil

"The recent price action in the oil market and the stronger response of the HY Energy sector has prompted many market participants to question the ability of the broader HY market to continue to resist lower oil prices. In our view, the bar remains high for oil prices to become the main directional driver of HY spreads but the risk has risen."

Trader Tells 'New' Volatility-Sellers: "Come On In, The Water's Warm"

"My message to all those new quant fund vol sellers, come on in! The water’s warm. Glad to have your new supply keeping implieds low. Don’t worry, I am sure the returns of the next 8 years of commodity volatility selling will be just as good as the last 8 years of equity index volatility selling… Yeah, when didn’t chasing the previous decade’s best return strategy not work?"