Thursday, June 18, 2015

Skynet Is Herding Investors Off The Cliff. Oh Well.

The accelerator is stuck in the "Risk On" position, despite ever-mounting risks

Skynet feeds on fear. Literally.
ZH: June 18, 2015
S&P futures have strongest opening ramp in four years on post FOMC (Fed) risk volatility compression (and fake Greece headlines)

Filed under careful what you wish for, robo-market never stops levitating and therefore allows zero risk management. Via volatility arbitrage (actual versus implied), Skynet systematically monetizes fear by draining put options and the VIX index of all premium. Which means that all risks will be ignored and in no way priced in, right to the last moment when they all get priced at the exact same instant.

Robo-market ignores all risks
In the year prior to Lehman, the market was starting to price in risk...Now, not so much:

What event will lead to repricing? 
What "event" causes a 400 pound fat man to have a heart attack?

Collapse is not an "event" it's a process of neglect that has been going on for years in broad daylight, and is nearing unveiling.

Choose your own fate: are risks random and uncorrelated or extremely correlated and inevitable?

No refunds.