Vol selling is back

First things first, the bull market and, predominantly retail driven, frenzy in cryptocurrencies, SPACs, NFTs, and BANG stocks—BlackBerry, AMC, Nokia, and GameStop—are to me all derivatives of the fact that the policy mandarins of the world are showering the real economy and financial markets with unprecedented levels of liquidity. To be clear, I do not mean to disparage traders who are able to extract value from these markets; all power to them. What I am saying is that if global monetary policymakers were not doing QE by the trillions, on an annualised basis, the bull market in many of these things would evaporate like mist on a hot summer morning. Meanwhile, in old-school assets—themselves beneficiaries of QE—the overarching theme at the moment seems that the vol-sellers are back in charge. The VIX has hurtled lower, to just over 15, and at this rate it will soon be in the low teens. The same is the case for the MOVE index for fixed income volatility, which is also now clearly driving lower, hitting a 13-month low of 53.4 in May. 

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