Monetary Matters with Jack Farley Volatility Markets Are Complacent | Kris Sidial on Tariff Risk to Stocks, Dispersion Trade, and Margin Risk
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Mar 19, 2025 Kris Sidial, co-CIO of The Ambrus Group, shares his bearish outlook on the U.S. stock market. He argues that volatility markets are underpricing risks related to economic policies. The conversation navigates various trading strategies, including dispersion trading and volatility selling in ETFs. Sidial emphasizes the importance of recognizing margin risk, particularly in market downturns. He also discusses the need for adaptability in investment strategies amid potential economic shifts, including tariff impacts.
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Complacent Volatility Markets
- Volatility markets haven't priced in the risks of Trump's economic policies.
- Investors are anticipating a market bounce and not hedging against further declines.
Disconnect Between Implied and Realized Volatility
- There's a disconnect between implied and realized volatility, indicating a lack of fear in the market.
- Investors are underestimating the potential impact of Trump's policies.
Past Volatility Spikes and Market Positioning
- During past crises like the Middle East war and the SVB banking crisis, implied volatility spiked.
- Sidial recalls observing high leverage in the market before Trump's previous election.