“Time Of Complacency Has Ended” – Volatility’s Back

Sunday, December 9, 2018
By Paul Martin

by Sven Henrich via NorthmanTrader.com,
ZeroHedge.com
Sun, 12/09/2018

Volatility is back and she’s here to stay and investors better get used to it. And traders, embrace her, she’s your best friend if you respect her.

In 2018 volatility finally broke free from the artificial bondage placed upon her by arrogant central bankers who thought they could control and manage the global economic and financial system with policies of permanent intervention. Initially introduced to the public as emergency measures following the financial crisis these policies morphed into a global perversion of free markets, artificially compressing volatility, dislocating money flows, price discovery and asset correlations, and ultimately resulting in the renewed market bubble that appears at imminent risk of bursting.

The consequences have run deep. Hedge funds found themselves lagging index performances as using your brain to analyze market structures to identify edges no longer mattered. Investors abandoned these funds in droves and turned to passive index funds under the illusion that ETFs are risk free vehicles to keep making money in perpetuity. After all risk assets never stayed down and every dip was bought. Why? Because there was no alternative (TINA) and if things wobbled there surely was going to be anther intervention just around the corner. QE 1, QE2, Tarp, Twist, QE3, the programs kept on coming. And so what if the Fed stopped and started to slowly crawl rates higher. There was the ECB printing more, the BOJ never stopped buying, rates stayed negative around the globe and yield thirsty money had to go somewhere else. No accident that the SNB kept printing Swiss franks and buying US $FAANG stocks by the billions and billions. Money had to go somewhere.

Fearing a new downturn emerging in 2015 and 2016 global central banks embarked on an intervention spree to the tune of over $5 trillion between 2016 and 2017. the largest concentrated intervention of its kind. Was it any wonder that volatility was locked away with the key thrown away?

The world had become risk free after all and stock markets stopped experiencing any form of 2 way price discovery:

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter