Real Vision: Finance & Investing How Low Can Yields Go?
Dec 14, 2023
The podcast discusses the recent FOMC decision and its impact on the US dollar, oil, and gold. The founder of Kai Volatility Advisors breaks down market flows and how traders are positioning for year-end. The potential risks for stocks and bonds are also examined. The podcast explores the bullishness in US stocks and bonds, as well as the birth of a new technological age. The possibility of a market crash is analyzed, along with the popularity and appeal of structured products. The relationship between interest rates, inflation, and monetary policy is explored, as well as the perception of the economy and the impact of inflation.
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Market Rally Driven by Flows
- The current market rally is driven by positive flows and short squeezes rather than fundamentals.
- These conditions set the stage for a possible blow-off top near mid-January 2024.
Manage Risk with Options
- Use options to manage risk in this volatile market rally with low implied volatility.
- Employ strategies like buying out-of-the-money calls or combining calls with short stock to hedge downside risk.
Structured Products Pin S&P Volatility
- Structured product issuance has grown significantly alongside elevated interest rates.
- These volatility-selling products pin the S&P 500's volatility, creating a supply-demand imbalance unique to the index.