Kass Warns: “The Probability Of A Flash Crash Grows Exponentially”

Wednesday, October 11, 2017
By Paul Martin

Submitted via Doug Kass,
ZeroHedge.com
Oct 11, 2017

“We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping. I admit to not understanding it.
–Dr. Richard Thaler, Nobel Prize winner

In an interview with Bloomberg Tuesday, University of Chicago economics professor Richard Thaler went on to say in response to the market’s low volatility and continued investor optimism, “It’s certainly puzzling… and it’s puzzles that attract my attention.” He added that he is nervous, and when investors get nervous “they are prone to being spooked.”

A World Without Risk?

These observations and, specifically, the quote I started with this morning are much like what I have been saying in my Diary — namely, that never in history have there been so many potentially adverse political, geopolitical, economic and market outcomes.

I am not alone in this view, as Macquarie’s Viktor Shvetz recently wrote:

“Investors are probably suffering extreme mental exhaustion. Historically low volatilities and risks, coinciding with high valuations, would make anyone nervous.”

According to the brokerage, the reason for this underlying dysphoria is that >”investors understand that there is nothing normal in the current environment of unprecedented financialization and economic disruption. The deadweight of US$400 trillion ‘cloud’ of financial instruments (backing into assets that are either worthless or are declining in value) must be supported by ongoing financialization.”

The Rest…HERE

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