Involving: a lack of volatility makes some traders concerned that we’re headed for a crash, but maybe it’s just a question of restraint(s), and the world gets two new leaders: the man in white and the man in (communist) state-capitalist red.

Good morning

The headlines:

  1. Vol.

    Link: that’s trader talk for “emotion”

    Volatility measures how much a share price/index/market moves. In times of great panic or excitement, you see great swings of exuberance/terror/cautious-recovery/fleeing-to-scream-in-corners. This quality is called “volatility”, which seems to be a rather civilised term for “the level of swing in your swing”.

    The story: some traders are concerned that there’s not enough volatility*. And warning that this shows “complacency” and that we could therefore be headed for a crash. Which isn’t as crazy as it sounds – how terrifying is a mob going all crazy together in the same way at the same time? That’s usually the start of a genocide.

    However, in this case, I think that the more likely situation is one involving straightjackets. Being financially restrained by fears of job loss, and generally depressed markets, and political uncertainty… I think that makes speculators less feckless – which means less volatility.

    If not – brace yourselves.

    *Surprised? It shouldn’t surprise you to know that traders will trade on almost anything: which includes trading on volatility. And it’s big business. Have you heard of calls, puts and any instrument that contains an option? Well in simple terms, options are valued as “how-much-this-option-will-be-worth-if-it-ends-in-my-favour” multiplied by “likelihood-of-that-happening”. That second part? It’s volatility…

  2. Pope Francis I.

    Link: his economic policy.

    There’s a new Pope. It was announced via white smoke and a tweet from the now-reactived @Pontifex account. And there’s already an opinion piece on his economic policy viewpoint.

    I’ve never been quite convinced that the Pope would really have much say in the economic policy of any country, save his own. And even there. But that aside – the expectation is that he’ll follow the same line as John Paul II:

    Just society “is not directed against the market, but demands that the market be appropriately controlled by the forces of society and by the state so as to guarantee that the basic needs of the whole of society are satisfied“.

    Read to the bottom for entertaining commentary from the Austrian economists: who basically accuse the economic position of the modern papacies of perpetuating mass poverty instead of alleviating it. And state intervention – bah humbug.

    But we could hardly expect the world’s oldest institution to be anti-institutionalist now, could we?

  3. Habent Papam: Xi Jinping.

    Link: the Chinese version.

    The Chinese, not to be outdone by white smoke and red hats, have formally named Xi Jinping as President.

    Now here’s someone whose economic policies should be more interesting.

    Where’s his opinion piece?

That’s all for now.

Have a good day.