Another down day for stocks

Published: Fri 30 October 2020
Updated: Tue 22 November 2022
By steve

In markets.

tags: journal

VIX about to take off?

I am a fan of The Market Ear. Usually they post interesting charts. Today’s post was them talking to “The VIX guy” who said that the VIX was heading higher. Certainly, a lot of overvalued (IMHO) stocks are trending lower. Maybe this is when holders decide to hedge with puts.

What’s driving this is, of course, the CBs. This post gives the relative picture of what the big four are doing. The non-Jap banks have quite a long way to go before they get to the BoJ’s position of owning 50% of all the debt. I feel that they don’t have so far before they get to the point where they cause their economies to stagnate, like Japan’s. I listened to Matt Ygelsias on Macro Musings. He’d argue that Japan’s stagnation is a result of it’d dwindling (and aging) population. I’m sure there is something to this. It’s a good podcast, and certainly makes the case for vastly increased immigration in to the USA. Sadly, as so often, a very sensible policy, from a

There are only so many cars and exercise bikes a person can buy

This article points out that spending on services is still well down, with the bounceback driven by spending on goods. The problem is that there is only so much you can spend on durable goods before you simply have too much to go on. You can sell the ones you bought earlier, secondhand, but that’s just going to depress the purchases made by other consumers.

Political Footnote

The wealthiest 1% has taken $50 trillion from working Americans and redistributed it, a new study finds. Here’s what that means.. The case for some sort of aggressively redistributive policies is growing. Huge social dislocations, like the Great War and the Great Recession and the Second World War and (in the US) the Vietnam War resulted in major programmes of redistribution (old age pensions in Britain, the New Deal in the US, the Beveridge’s Welfare State in the UK and Johnson’s Great Society in the US). I’ve seen lots of proposals (this one seems good) but however it’s done, unless we disenfranchise those impoverished by Covid-19 we are going to see some major transfer payments. Already Americans are waiting for their Green New Deal. I fear something of this ilk will be adopted in the UK. This will be a replay of how the UK govt. paid for the last war: by keeping real interest rates negative.


Solidly risk-off day today. Slight spike at the close, but pretty clear cut direction. Against the conventional wisdom, the dollar was pretty flat (DX up 0.12% but down 0.77% vs MXP). Likewise yields of US Treasuries were up. I am sure there will be more money creation and stimulus, but some of the crazier stock prices might come down to earth. I’ve been waiting a long time for bonds to peak. This may or not be the point, but we have to be nearer it now than we were in 1990.

Lots of questions over Tesla FSD going into public beta. Waymo are miles ahead of Tesla, and it seems clear that people are going to die. It’s no longer just the $TESLAQ crowd who are questioning Musk’s integrity.

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