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SI357: Liquidity, Leverage, and the Lie of Calm ft. Cem Karsan

151 snips
Jul 19, 2025
Guest
Cem Karsan
Cem Karsan, an expert in volatility and market structure, discusses the deceptive calm in the markets, revealing the hidden complexities of a crowded hedge fund ecosystem. He dives into the unexpected spikes in the VIX due to call activity and the subtle pressures on monetary policy from political dynamics. Karsan also analyzes China's strategic resource diplomacy and the looming impact of AI on employment. The conversation emphasizes the necessity for cautious investment strategies amidst rising fragility and systemic risks, urging listeners to be aware of traps lurking below the surface.
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INSIGHT

Unusual VIX Spike Cause

  • The VIX spike during recent market drops was driven by massive call buying, not puts as usual.
  • This call squeeze created volatility different from past events, indicating structural market changes.
INSIGHT

Broker Concentration Risk

  • The concentration of top stock trading clients among three brokers creates significant systemic risk.
  • This centralization reduces market agility and increases fragility during crises.
ADVICE

Volatility Trading Advice

  • Avoid equity volatility indexes for hedging inflation; focus on options trades in factor rotations.
  • Long FX and bond volatility are superior plays for the current inflationary decade.
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