Nov

6

US Vic, from Jordan Neuman

November 6, 2014 |

Ten straight days with a 141 settlement handle. Ten day Vic (cumulative changes) at less than 2 points. How is Draghi going to upset this quiet?

Editor's Note: The Vic (first defined on this website in 2002) is a measure of volatility that uses absolute point changes rather than standard deviation.  For example the "10 day S&P Vic" is found by adding together the absolute daily point changes in S&P for the last 10 trading days.

anonymous writes:

It is important to understand what the currency markets are for and how they are used in the modern context.

Arguably the whole game is about keeping the stock markets (or more generally the 'risk' markets) going higher.

The USA started the game late in 2008 with QE. After a time the Europeans took over. Now increasingly the Japanese will supply the liquidity.

The Euro currency lower story is fading into the background in terms of 'rate of change'.

For the avoidance of doubt, the only two countries that are serious about lowering their currencies are Japan and Switzerland (Switzerland is a case study in defeating the markets - read about their actions in 2011).

The current QE in Japan is huge– make no mistake — an order of magnitude greater than the USA's actions.

The Europeans, at heart, are stable/ strong currency types and do not have the stomach to get genuinely serious about weakening the currency.

A multi-billionaire of my acquaintance in discussing Japan, put it to me this way– it is not often that a country pre-announces it's own bankruptcy.

Inflation is an interesting phenomena in this era, it is hard to create but when it arrives, it destroys. It is pathetic that policy makers believe that they can keep such a thing in control when it gets going.

There exist genuine reasons for low probability scenarios to play out in coming months.


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