Is the world getting more cynical nowadays? Gone are the days where a piece of news will shock the markets and stock markets go into a tailspin or financial markets volatility shoot off the charts?
We had a crazy Friday where Trump decided to bomb Syria for the sarin attack, another terrorist attack in Stockholm and markets hardly moved. Russia is now trying to escalate the pressure by further arming Syria. What is happening? Are people now so immune to shocking news that nothing scares anyone anymore?
Volatility is continuing to fall and I have a big hole in my pocket for my long TVIX positions… The theory is that in a search for yield, hedge funds having been doing a sure bet trade for the last few years, creating short positions on volatility with time decay on their side. Volatility has hit historical lows and no end in sight. What does it take to shock the markets anymore? Not since Lehman in 2008 have we seen fear in the markets. Traders are afraid to take leave nowadays because the few hours that may help make or break their chances to achieve their budget may just slip pass them if they step away from their trading desks for a few hours.
Separately, people are also getting jaded at work. Again on a Friday, as in the last few weeks, half the project team of 20 were told that they were let go. This was 3 weeks after the head and deputy were fired. The remaining senior guy was on vacation in Japan and received a call that he lost his job. What a way to spoil a vacation… A clean the shop execution plan. Job security? It is non-existent nowadays.
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