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Hope all goes well… He stood smiling. But not quite his smile. Behind him in the photo was a wall of countless skulls. Each with its own story, forever lost, but for its final chapter, to Pol Pot’s killing fields. Jackson has accompanied his grandmother to Cambodia, to volunteer for an Operation Smile mission. Where doctors mend the world, one child at a time. Mara had cried, as he left our little oasis for something

Hope all goes well… “The VIX curve was flat at 20-21,” said Roadrunner, the market’s biggest volatility trader. “Everyone expected things to fall apart, which meant we had to rally.” And as stocks spent weeks grinding to all-time highs, on declining volume and collapsing volatility, the VIX curve steepened dramatically. “It’s easier for interesting things to happen when the curve gets steep,” he explained, looking le

Hope all goes well… “I couldn’t have imagined this could happen,” said the investor, sitting in Amsterdam. “What neighbors would do to one another,” he continued, having fled Sarajevo in early 1992. “The French are socialists, with a bad economy, this breeds the resentment, it creates the conditions,” said the Dutch businessman. “The Germans have a strong economy, they need workers, and so it works, so it goes,” he c

Hope all goes well… “People were looking for multiple expansion,” said Yoda, high in the Rockies. “But who expected it would happen with prices at all-time highs, while earnings forecasts fall?” asked the market’s biggest S&P local. “6wks ago the S&P had 35-point ranges, now they’re 11-points,” he said. “Have sellers surrendered?” Then Yoda paused. “This is the 6th year of the bull market, what does that tell

Hope all goes well… Amsterdam. Geneva. Next stop London. And squeezed in between, high altitude. Solitude. A late night walk through the forest. Mont Blanc aglow, reflecting. Recollecting. And recalled an anecdote from my year here. Argentiere. (see below) Back next Sunday, with full wknd notes. Week-in-Review: Mon: China trade surplus record $60bln (imports -19.9% yoy, exports -3.3%), Japan CA surplus Y187bln (trade

Hope all goes well… “You can make money being long or short,” said Road Runner, the market’s top volatility trader. “You just can’t fall in love with a position.” Late Wed, the S&P slipped 20-points on Greece. Then jumped 20 on Thurs. Friday it rallied on a great jobs number but closed lower. “Equity vol prices tell you people remain nervous.” On down-days there’s no scramble for puts. “The oil pop was a bear mar

Hope all goes well… “I’m not smart enough for nuance,” said the CIO. “So I focus on the obvious.” The S&P closed the month -3.1%. 10yr yields fell 53bps to 1.64%. 5yr/5yr inflation swaps fell 18bps to 2.12%. “This is so obviously not a risk-on year, January tells you all you need to know.” Volatility jumped across all assets. And in a highly-leveraged world, volatility’s not your friend. “This isn’t a year to buy

Hope all goes well… “Know what drives me crazy?” asked the CIO. “When people say a trade is crowded; what does that even mean?” By traditional measures, the short oil trade has been crowded. The long dollar trade too. “If the short Euro trade is so crowded, why can’t it rally for more than a day?” There are times when markets mean revert, and times when they trend. “Speculative systematic traders keep piling on these

Hope all goes well… “How is it that investors are lulled into believing things are not changing?” asked Yoda, high in the Rockies. “When everything’s changing.” Energy, exchange rates, interest rates. “And when markets start changing their nature, why do traders not stay small and nimble?” continued the S&P 500 market’s biggest local. “Why do they cling to their dip buying belief, when deep within their psyche th

Hope all goes well… “The last few years, every time vol popped you sold it,” said Roadrunner, the equity market’s biggest volatility trader. “This year, that changes – 2015 will be special,” he continued. “The S&P vol curve is flat for 9mths, at 19.5-20.0, which tells you it’ll be volatile; that’s good for the market, it’s great for traders, it’s bad for buy-and-hold investors.” And terrible for guys with leverag