Hope all goes well… “Saw tremendous hedging this week in VIX options,” said Roadrunner, the market’s biggest trader in equity vol. “Looks like they’re buying the S&P, then buying 3x the equivalent amount of VIX calls. When vol (and the vol of vol) gets this cheap, maybe that’s the new way people will protect their portfolios instead of buying bonds,” he said, darting a look left, right. “And, at the same time, th

A“War is the continuation of politics by other means,” said the Commander, quoting Carl von Clausewitz. We were discussing geopolitics. “Negotiations that precede every conflict continue throughout every war,” he said. “We’re seeing that play out in real time right now, but in highly charged domestic political environment.” America’s military is non-partisan, faithfully defending the Constitution, obeying Presidents.

A“Imagine Congress appropriates $1bln to refurbish Air Force One,” said Warren Mosler, pioneer of Modern Monetary Theory (MMT). We were discussing the financial architecture that allows the Fed to create money. “The Department of Defense (DoD) hires General Dynamics to upgrade the airplane. The US Treasury instructs the Fed to credit General Dynamic’s account at JP Morgan with +$1bln. The Fed simultaneously debits th

Hope all goes well… “She got it right,” said White House economic advisor Larry Kudlow, marking the first time a senior member of Trump’s team has had anything nice to say about Alexandria Ocasio-Cortez (AOC). “She said the Phillips curve is no longer describing what is happening in today’s economy,” continued Kudlow, “And Powell largely agreed. He confirmed that the Phillips Curve is dead, the Fed is going to lower

Hope all goes well… Dusted off an anecdote on systematic investing from 2017 (see below). Back next Sunday with full weekend notes. Week-in-Review (expressed in YoY terms): Mon: Xi/Trump restart trade talks, China Markit-Caixin manufacturing PMI -0.8 to 49.4 (5mth low), Asean manu PMI 49.7, HK protesters storm government legislation buildings, Trump visits NK, Iran exceeds 2015 nuclear agreement fuel limit, Saudis/Ru

AOnce upon a time they built a system. They promised state workers a pension. At the system’s birth, the nation was in a Great Depression, stocks were in free fall. So naturally, the system’s creators invested in safe bonds. For decades, system membership expanded, assets soared. World War II came and went. The cost to win was enormous, the federal government incurred a staggering debt. To grow its way out of that ob

Hope all goes well… “I had a great meeting with President Xi of China yesterday, far better than expected,” tweeted Trump. “I agreed not to increase the already existing Tariffs that we charge China while we continue to negotiate. China has agreed that, during the negotiation, they will begin purchasing large amounts of agricultural product from our great Farmers. At the request of our High-Tech companies, and Presid

AHe considered the wall, each stone a worry, within its pattern a story. For three decades he’d been climbing. Every wall was different, a reflection of its unique history. Only at the top were they alike. From that perch, the wall-of-worry overcome, did the greatest risk appear. When he first started studying markets in the trading pits, survivors simply said that prices top when there are no more bears, when everyo

Hope all goes well… “We the North,” flags waved above the crowds. “We the North,” banners hung throughout the city. “We the North,” chants rose and fell in the crowd of 2mm (one-third of the city’s 6mm population). The Toronto Raptors won America’s National Basketball Association Championship, the first foreign team ever. Their players are imported, immigrants, but so what, they’re Toronto’s now. They made magic happ

A“So Jackson was named All-American, First Team All-State, First Team All-FCIAC, and won the State Championship — any reason I had to hear this 2nd hand?” asked Coleman. He was Jackson’s 8th grade lacrosse coach and has turned out more All-Americans than just about any American. Not a single player will forget their season with him. The smartest ones stay connected forever. When I grew up, I was blind to the va