Things to ponder

• The Worst Risk/Reward in History? Charlie Bilello.

• The Fed is creating a lot of money. Velocity now is low, but when it picks up, we’re in for some serious inflation … probably. The US Govt. bond curve is steepening sharply. This suggests that bond investors are anticipating it.

• Commodities have never been cheaper relative to the SPX — page 38, h/t Daily Shot.

• Globalization, dating from China joining the WTO in the early 90’s, has doubled the correlation of national business cycles.

What happened today?

My long-vol strategy failed me today, but not seriously. This is particularly odd, given that there was very low vol. in the markets today, nearly all markets drifting gently downwards.

Newswise, nothing much to report. Bolton’s book is still not out. Pelosi is piloting a $1.5Trn stimulus bill through Congress. All the CBs continue to buy bonds, but seemingly can’t hold down rates, at least for more than a day or so.

Gold still can’t break out, in spite of everything. Commodities continue to be subdued, although the oil complex is up, especially gasoline, which is 3.1% up (as of mid eve. UK time).

What will happen tomorrow?

If I knew the answer to this, I wouldn’t type it here. But this evening, I am more puzzled than ever. Equity indexes seem depressed, but not dramatically. ES is down 0.25%; the Nasdaq flickers around zero, having outperformed the SPX for some while. At some point, investors will judge the FAANG to be fairly priced, at least on a relative basis, but we haven’t got there yet. The Brazilian index (Bovespa) is up against the trend, and the currency (BRE) is down, as foretold. This is probably a trade, but not yet …