Fed Up! by Colin Lancaster

Author:Colin Lancaster
Language: eng
Format: epub
Publisher: Harriman House
Published: 2021-03-22T15:53:32+00:00

The dollar is starting to weaken. Risk assets are in free fall. Now it’s the USA that the market is worried about. It’s becoming a total shit show.

The market is melting. Markets are now pricing three US interest rate cuts by the end of this year. The Dow is down 900 points at the open. Bonds and gold are ripping. Ten-year bonds are at historic lows in yields. US oil futures are below $50 a barrel. Vol is spiking. Crude is now down close to 25% this year. German yields are negative again, out to thirty years—the entire fucking German curve.

I’m standing next to Elias, at his station. He has one of those riser desks, and he has it elevated. We are doing a line-by-line review of our risk. We flattened risk significantly a week ago, but we need to go through again. We need to know where we have any basis risk, or anything else that can go wrong. Liquidity is getting worse. Credit’s starting to widen.

All nine of his banked monitors are flashing. He has an enormous amount of information on his screens. For most people, it would be complete overload; they wouldn’t know where to begin. But for him, everything has a place, and it’s one big mind map in action. Across one entire side are a group of chats. There must be eighty or even a hundred open chats with people. He has screens dedicated to particular asset classes. One is a global rates monitor, another shows all of the major FX pairs, and others show equity and credit markets. He’s good at his job, staying on top of every headline, knowing what every sell-side guy is thinking.

I yell over to Lifecoach and tell her to make sure our funding is termed out.

The desk is eerily quiet right now. Everyone is staring at screens. Just flashing lights. There is so much red on the screens it’s as if our whole office has a red tint.

Today has brought the single biggest point loss in history for the Dow and S&P. The highest dollar volume traded in QQQ, the largest ETF that tracks the Nasdaq, since the day Lehman blew up. People are starting to get rattled. Federal health authorities said they now expect a wider spread of the coronavirus in the USA and are preparing for a potential pandemic. They called for businesses, schools, and communities to brace themselves and plan for potential outbreaks.

Thursday

It’s only Thursday but this week feels as if it has already lasted a month. It’s all happening so fast. We’ve been working around the clock. Swarms of locusts in Africa, the plague is spreading.

The market doesn’t like any of it. Liquidity is becoming a real challenge. Market players are starting to talk about the credit ETFs, the likes of LQD, HYG, and JNK, and for good reason. Credit ETFs are designed to give retail investors bite-sized exposure to markets that would otherwise be prohibitively expensive to access. Their portfolios include off-the-run high-yielding corporate bonds that might not even trade every day.

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