Thank God last night was just a manic Monday and not Black Monday, even though I saw doomsday options trade in the index futures market on Sunday night and the VIX was 60 at the open. This is 100% evidence that some major financial institution is in distress because 60 VIX is a 3-sigma event that I have seen only in 9/11, the GFC and the pandemic.
It was surreal to see mass liquidation in even safe haven assets like gold and the British pound while the fake news inspired $2.5 trillion rally led to the mother of all trading opportunities. Literally money begging to be picked up in the Chicago options souk.
I learnt the hard way once again that the efficient market hypothesis they taught us is utter nonsense and it is more important for me to know what Freud says about death wishes than what JayPo says or does not say about monetary policy under Emperor Trumpus Tariffus.
The last time I pulled so many all-nighters was during finals at Penn/Wharton in a barely successful quest to receive my Masters in Bubbleology and Amnesia. A degree that I interpreted as Mexico, Brazil and Argentina with the help of Borges, Paz, Fuentes and García Márquez. It is impossible to fathom Latin America without being fortified by the literature of magic realism, the rhythms of salsa/lambada and the Spanish slang to navigate the ultimate Mercado Libres with novias in Gringolandia, who also doubled as two legged dictionaries south of the Rio Grande. The pay off? Memories of a lifetime and the next 5X puppies destined to emerge out of the current bloodbath.
Emerging markets and Wall Street are a comedy for those who think and a tragedy for those who feel and sometimes all I can do is laugh and cry at the same time at the hubris of the powerful as they condemn hundreds of millions of the powerless, fanons, wretched of the earth to literal death with a stroke of a pen in a lethal Executive Order. Yet Sophocles taught us 2500 years ago that after hubris comes nemesis. Too bad Greek tragedy is not in the curriculum of CFA Part-3 or MBA bootcamp. Just stroll down any bank in the DIFC or its global peers and you will get a doctorate in ethics, also known as asymmetric regulatory arbitrage, in plain English how to fleece a client with special purpose vehicles in peekaboo finance, the quantum physics of structured products and the sheer thievery of jumbo insurance.
Lord Keynes was so right. In the long run we are dead. In the short run, we get a margin call and that is exactly what happened to the world last night. Anybody who wants my trade strategy ideas, please message Manju +971504280691 and I will try to do my best over the weekend to answer your stock/FX/bond dilemmas. Nietzsche said, gaze not into the abyss lest the abyss gaze back – but this will not happen tonight as Nasdaq has a resurrected dead cat bounce of 300 points to celebrate Easter. Buena suerte, compañeros.
Also published on Medium.
