That was quick. No time like the present to end “Stupid is as Stupid does…“. Just a hunch on my part, but traders probably noticed the Fed’s shorting volatility and joined them a long time ago. Nice little profit this last year as volatility vanished from the markets as the trade got extremely crowded.
No more it appears. There is a new sheriff in town. Note his 2012 quote under the chart.
Powell appears to have stopped the Fed’s short volatility position
In one day, all those remaining in the trade probably lost everything. These funds are shutdown. So expect a return of volatility in the markets without these suppressors.
Categories: Perspectives, The Smart Bird