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"Volatile Volatility"
From Deutsche Bank's Jim Reid
My favourite quote from yesterday was from Citigroup's CFO who when discussing their results said they were suffering from "volatile volatility". This reminded us of Donald Rumsfeld famous "known unknowns" remarks a few years back. To be fair the last 24 - 48 hours give some credibility to the statement. At one point yesterday Oil had rallied nearly 14% from lows the previous day before falling some 10% from the highs. But of course the main story was the SNB's currency play which led to a once in several generation move for the Swiss Franc. The price action was dramatic with the Franc immediately appreciating some 29% intraday against the Euro, touching a record low CHF0.852 before closing at CHF0.975 at the end of the European session, still around 19% stronger on the day. There were similar sharp moves against the Dollar. An initial 28% rally into intraday lows of CHF0.741 was pared back shortly after, but the Franc finished 18% stronger at the close against the Dollar at CHF0.839.
Indeed as a one-day upward move in a major currency its had few peers through history and is firmly in the top 10 of daily upward moves for any currency (vs the dollar) that we have data for which in many cases goes back into the nineteenth century. Most of the others in this top 10 are EM countries. So this is a rare event as when a peg gets abandoned and a big move ensues it’s usually a devaluation from a fixed rate system.
What makes this move shocking is that just last month the SNB committed themselves to preventing their currency appreciating beyond 1.20 to the Euro and vowed they would enforce the policy with "the utmost determination". The risk for the global financial system is that if the SNB can make such a dramatic u-turn could other central banks follow at some point. We're not so concerned here as their situation is arguably a lot different to the ECB. The ECB might actually look at the wider market moves yesterday and be scared to disappoint.
Once you artificially impact a market, changing course can be very painful. The other fear we have is with such volatility recently (and big declines), particularly in Oil and FX, will there be someone holding very bad positions and steep losses that will seriously impact their business and cause dislocations in other markets as stressed liquidations are forced upon them? Experience tells you there's a chance but its not easy to anticipate. One to consider though and already people are looking to Eastern Europe where there are many Swiss currency mortgages. Also Bloomberg is reporting this morning that a NZ FX broker is shutting down its business and the largest US retail FX broker is facing some risk due to client losses both as a result of the move.
I was actually at one of our regular flagship macro dinners last night with 25+ clients and around 10 DB research, sales and traders. In the ones I've been at previously there have usually been much higher conviction than there was last night. It seems to me that confidence has been shaken by the events of the last say 3 months with confusion over Oil, EM, QE, rates, the global economy and now FX. Volatile volatility indeed!
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Waiting for a move of similar magnitude in Renminbi...
What makes this move shocking is that just last month the SNB committed themselves to preventing their currency appreciating beyond 1.20 to the Euro and vowed they would enforce the policy with "the utmost determination".
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There's your mistake... You actually believed them...
Hey, ALL bankers lie!
The Swiss just rang the bell on what happens (even in these "this time it is different" times) when you point out the QE emperors' lack of clothes.
That bell cannot be unrung.
It seems the "credibility" the Swiss national bank lost [today's Bloomberg propaganda] is directly proportional to the "credibility"/value the Swiss Franc gained.
Per Bloomberg, it would seem the most "credible" central bank on the planet is Argentina's.
The market should be slowed down. Otherwise we will have 10% hourly fluctuations in exchange rates soon. This will make any real business activity impossible.
The market should be slowed down.
We've been trying to slow down this crap since 2008......time to take the medicine
So how come the VIX did'nt square? Another manipulation??
There's 2 things I really like doing, getin naked and readin zero hedge, which one you think i'm doin now?
not enough jumpers,,,
jump head first..
What makes this move shocking is that just last month the SNB committed themselves to preventing their currency appreciating beyond 1.20 to the Euro and vowed they would enforce the policy with "the utmost determination".
That was the warning............they would not enforce the policy with "the utmost determination"
It's the last desperate attempt to keep it going............................
Sometimes it works, some times it works untill it don,t think Draghi, some times it just does not work
Poor hedge funds shorting the Franc got bent over.
Boo hoo.
One gunfighter in the Mexican Standoff of QE currency manipulation/war just started shooting.
i now know that many lost their asses. great fucking news! some might jump, but most will go home in great dispair, some may now know what mainstreet is feeling daily...
fuckem, i give zero shits...
jump you fuckers, every last one of you...
Suck it bitchez.
Damn, around here you are somewhere between uranus and saturn, a very lonely and cold place in deed.
The Swiss Franc just made Bitcoin look stable !!
It would have been interesting to know where the market would have ended up yesterday if the SNB had not anything, there had been a big ramp overnight, the DAX had steamed through 10000 and a huge Dow rally looked like it was on the cards, it now seems that the SNB's Jordan had not warned Lagarde or anyone what was about to occur...it seems if one is cynical that he is mightily pissed of with Draghi? and deliberately threw this spanner in the works?
i think you're right on every score.
but this is more than a spanner, the swiss are blasting grapeshot across uncle sam's bow.
next comes grexit; after which follows the bondamageddon; then everything south-to-southeast of the pyrenese takes a massive shit; next it's the nordexit (except maybe norway and holland); nato then collapses with france leaning north with the germans and spain tiliting toward GB & USA (but catalonia may (probably will) go german (and the basque may very well follow them); poland and the baltics don't know what the fuck to do; italy will fracture, with the north aligning itself to the greater german union and the south rendered someone's vassal state -- i reckon the russian bear would pay the pensions of some shiftless sicilian orange pickers (and take down their syndicate rivals in the process) for a brand spankin new mediterranean port (all with the german's blessings).
funny the timing of that german intel breech leak (was that some kind of tacit threat, langley? yeah, i'm talkin to you)...and maybe, just maybe, jordan is supposed to be pissed at draghi...after all, switzerland makes for the perfect joint about which (northern)italy, france and germany can orbit fluidly. switzerland is strange -- i mean, for a nation that didn't participate in the second world war, they were, in some VERY meaningful ways, more involved than the participants.
anyway, whatever the case, i'd hate to be a muslim in europe come autumn.
janus
oh, and, nato's toast.
Central Bank credibility was destroyed long ago, and the nail in the coffin was when they backstopped banks, corporations, and elites instead of citizens.
The fact that so many still worship at the Church of the Holy Sepulcher of Debt tells us why there is volatile volatility; one lie requires one thousand lies to cover the first lie.
Central Banks and "controlling inflation while encouraging employment" for the sake of citizens is one of the most perverse and damnable lies ever told.
Good morning ZeroHedge members. Wanted to extend a public service announcement. Despite all of our differences, we need to work together. Please watch! Thank you for all the great insight everyone posts on a daily basis.
Era Of Shattered Illusions <<<<<<<
Careful what you post. This is fight club. Don't want you getting tagged as an 'Extremist'.
but listen to that voice!
http://www.youtube.com/watch?v=gB8DCoS-5CA
Thank you, but I don't live in fear. It's my moral responsibility to hand off the truncheon to the younger generation. All I ask, spread the word. I'm galaxies away from being an extremist, rather a realist trying to help others.
outstanding vid, Atomizer.
Let’s try to stay grounded. We already know the enemy and puppet masters.
Still, Payback's a Bitch- Blackberry Smoke
https://www.youtube.com/watch?v=Y42gLwXuP6o
What the central banksters are playing is global economic Whac 'a Mole.
Yesterday the Swiss Franc had to be added to the list of the "markets that must be manipulated".
The moment the QE volcano explodes will be when the value of "markets to be manipulated" exceed the aggregate GDP firepower of the manipulating central banks.
Get printing you central bankster bitchez!
The same thing will happen with gold once the Fed announces it will no longer manipulate the price
Swiss/Russia/Gas 2009
http://www.swissinfo.ch/eng/switzerland-insulated-from-russian-gas-dispu...
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From 2014:
http://www.swissinfo.ch/eng/is-europe-ready-for-russia-choking-supplies-...
the horror of a stronger currency. the horror of a 10% single day stock market decline. the horror, the horror... [/apocalypse now]
Yep, it's white-capping out there. If you don't understand what's going on you better put your little boat on a trailer and watch from shore. Some of them ships going down is making my damn day. who wouldda thunk black gold would be the black swan.
I imagine a meeting where in the german french and italian banks are explaining the urgency of propping-up greece while also boosting the flagging european economy. Merkel is nodding in understanding The krugman chimes in that what they need is moar of the same, much moar.
Oh, and theyre all naked of course
All those complaining about the SNB's Dec vow to defend a min xchg rate seemed to have missed the chaser:
"If required, the SNB will take further measures immediately."
Volatility is tradeable with the right tool...
http://www.globaldeflationnews.com/how-to-tame-the-volatile-financial-ma...