The Hong Kong Dollar has plunged to its weakest level against the dollar (to which it is pegged) since February 2016, even as the Hang Seng surges higher. As HKD nears 7.80, triggering likely HKMA intervention, we wonder whether we will see a replay of last year's liquidity-driven stock market slump.
Less than a month after the latest forecast from JPM's Marko Kolanovic left something to be desired, when the famous quant said "it is no longer prudent to buy the dip" only for the dip to be furiously bought, whether by algos or ETFs, "Gandalf" is back with another discussion of his favorite topic, and an emphasis on a issue that is near to all traders' hearts, namely what could lead to a "volatility explosion."
Authored by 720Global's Michael Lebowitz via RealInvestmentAdvice.com,
“History has not dealt kindly with the aftermath of protracted periods of low risk premiums” – Alan Greenspan
"Someone's liquidating" warns one veteran energy trader as the sudden heavy volume surge to the downside in WTI crude futures smashes oil prices back to the lowest since August 2016.
Surging US crude production (once again to August 2015 highs)...
And demand forecasts are tumbling:
And loss of faith from the hedge fund community..
and this is what OPEC gets...
"Something is off," warns RBC's head of cross-asset strategy Charlie McElligott in the introduction to his latest market noting that the swing in US fiscal policy optimism is coming at a critical time as the China's liquidity tightening is spooking the reflation story.
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