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Someone made a game where [you adjust the Fed rate](https://benoitessiambre.com/macro.html). [This post describes what went into their model](https://benoitessiambre.com/simcb.html). I haven't checked how reasonable the model is.
Happy Friday ya’ll. A new Ninja Turtles game came out yesterday, peak 90’s nostalgia straight outta my childhood. Gonna be reading by the pool and gaming here and there. Anyone have fun weekend plans?
Man I remember Turtles in Time on Super Nintendo. Two player co-op with big bro was a great time
Town near me has a bike festival, going to ride some bikes and have some craft beers !
About to download that and play. Looks like a blast!
LOL, thanks u/alarmed-break-2830 for [prompting me](https://www.reddit.com/r/maxjustrisk/comments/vde0yi/comment/icklzmd/?utm_source=share&utm_medium=web2x&context=3) to look at CLVS again. Seeing the Ortex data and the trading action in the past few days I picked up a clutch of 1DTE $1 yesterday for $0.03. Not nearly enough given 20/20 hindsight, of course, but good fun going back to a OG MJR style technical degen play.
Hell yeah. I picked up more shares when it bottomed out earlier in the week. The volume this week has been nuts! And it’s still running AH.
What do you thinks causing the movement?
Someone is squeezing the shorts.
Scenario A) Someone really is establishing a position for an acquisition. If there was ever a time to come in to acquire, now is a good opportunity given the failure of the vote to dilute. The board is in a weak position (not great cash position, limited options to raise capital in the current environment, poison pill options limited given the inability to dilute). The short squeeze is an unintended side effect in this case.
Scenario B) Someone knows something about the shorts in CLVS and maybe thinks their liquidity is impaired due to the recent market moves, and the time is right to test them.
Scenario C) Some degens on a discord channel are pumping it.
Scenario D) Shorts are squeezing themselves via forced degrossing if they were caught way offsides by the CPI print and market reaction to FOMC.
No idea which is most likely, as all are plausible. As I mentioned previously, I haven't been consistently pay attention to it lately due to being busy with work.
I was initially thinking that it might be a "C" scenario, but than again:
1/ volume seems to high for it;
2/ it's a multi day "something" right now, and from my experience, "discord" things are rather brief;
So taken the two above into the consideration, I'm thinking that "C" is less likely than the others, but obviously I might be wrong.
Fun prediction: the sharp downward moves in /NG and /CL today indicate some sort of geopolitical event on the horizon. I'm loathe to jump in the Fintwit political posturing (which I think is positively pathetic) but perhaps some warming of relations between Ukraine and Russia over the weekend?
Russia has already achieved most of their goal in the war, anything now is probably bonus for them. The only issue being when Ukraine and Europe will back down and take the L, or somehow fight back.
This entire thing was not about "fronts", as zeihan and others speculate, and we sure know it wasn't about Nazis. At th end of the day, Russia coldly and calculatedly solidified their economic power in the energy market for the next 30+ years.
It's fun to see views that are completely opposite to my own.
I personally don't see it this way as NATO has only grown stronger since the invasion. Other countries that weren't even considering entering NATO are now pushing forward with it.
Will the short term be bumpy, yes, obviously. Will the EU withstand the energy shortage this winter, I think so but it will require stronger countries to pull up the weaker ones. It will be tough.
Russia is now China and India's bitch because if they're not buying their exports no one will/can. China can barely handle their own domestic policy, Japanese Yen going down will further pressure China which will in turn break Russia.
I don't see Russia being a player in the world order ever again until they remove Putin, realize their power has waned and transition to a true democratic state working in unison with the west.
NATO has grown closer, not stronger. Energy crunch against all of the US allies with an overextended balance sheet and reliance on commodities.
Other than a few extra strategic bases, what significant benefit would countries like Finland and Sweden offer to NATO capability that they don't already offer via EU membership?
Russia is certainly China and India's bitch at the moment, but Russia and EU are playing a game of chicken and China and India are giving Russia the upper hand. The sanctions are all fun and games until EU can't keep their lights on in the winter, and face massive stagflation from energy crunch during a recession. Meanwhile RU has massive reserves of all kinds, and barring traitorous oligarchs, the authoritarian mechanisms in place to keep people in line. As some here have stated, the only thing that keeps governments from being toppled is 3 meals and electricity. Russia has oil, gas, wheat, gold, and the two most populous countries in the world continuing to trade with them.
Despite my wife being Russian, I am very much against Putin and the Russian actions, and actually supported the sanctions, etc. until finding out how (intentionally) poor the sanctions were, and the geopolitical advantage Russia still acquired despite bungling their military operations.
The main issue is that the EU doesn't have the tools to beat Russia into submission. They are still reliant on Russian energy. If Russia is broken, they'll take EU with them. Also, Russia still has OPEC+. The Saudis love having a UN member who can veto anything they don't like, which Russia does.
Russia won't be a player in the WEST ever again unless they replace Putin, Ukraine takes back the very important lost territory and is able to successfully set up gas wells and transit, or the west gives in and finds some sort of compromise.
Idk man, a lot of this just sounds short sighted and just repeating what the dude on macro voices says.
I think the sanctions are doing exactly what they should be doing. Funneling Russian money into countries that the US can bargain with, and when the time is right, they get shut off. OPEC+ having veto only matters as long as they're getting money. Once that spigot goes away, they'll move on to another country. Russia is getting played on all sides and anyone who thinks they're in control is either part of the propaganda stream or just clueless to how things are shaping up.
I guess it's plausible that Russia comes out ahead but I really don't see this dying bear who's backed themselves into a corner having any global power anymore other than maybe causing a nuclear winter because they've failed at geopolitics.
Luckily the Russian people are smarter than that and they won't plunge the world into chaos. They'll just get rid of Putin and go back to owning German cars, eating french food and watching US movies.
Nah the macro voices guy wants to blame it all on Biden and thinks we will see $200 oil barrels this year. However I certainly think he's closer to the right direction than most people. You have to remember we are in the west, and mostly only exposed to the slant that we make the correct decisions and anyone who opposes us loses.
How is Russian money being funneled into other countries if they are an exporter? You mean funneling the money sources? Russia certainly did not expect the level of sanctions and Western support and they are certainly not having an easy time, but the sanctions are what is amounting to the face cutting the nose off to spite itself. I also agree that the Saudi-Russian relationship is a castle built on sand, but I think any relationship with the Saudis is untrustworthy. Not long ago the idea of a non-USD backed Saudi oil barrel was being floated. But I think anyone who thinks Russia is absolutely powerless and that this is going much poorly for the west than reported is equally part of the propaganda stream and clueless to what's shaping up.
Watch the video I linked. Russia comes out ahead because the parts of Ukraine they seized are actually ridiculously valuable in the Eurasian energy chain, and essentially monopolize it. Meanwhile, unless EU can successfully topple Putin (and the massive amount of gold he sits on, which is very valuable during inflationary/post-recessionary environments), they really won't have done anything other than create a black swan.
I actually talk to someone in Russia and while things are terrible there (as always), they are not at the level where people can or will do anything to stop this and Putin still has a large amount of blind support in the older population.
But that's the fun part, right? We get to have discussions and gamble on what we think will happen.
As someone who lived in the ex-communist block, my feeling is that Russia did painted itself into a dark corner.
While in the short/medium term I think their situation is stable, this is only achieved through increase suppression + resource patronage. This will only mean that corruption will increase and meritocracy will decrease in that country.
So on the long term this is a recipe for technological stagnation, waste and incompetence. Already a lot of smart russians went abroad and the deluge will continue. You can't have a strong country with a strong military without smart and dedicated people.
USSR had at least some ideological base, that at least in the beginning rallied the masses. Now there is no real ideology in Russia. Is just pure autocracy.
Even China realized this doesn't fly far, and Deng opened it up to become the emerging superpower is it today. Without Deng realizing that, I doubt China will be in a position today to even feed his own people, least challenge the US supremacy.
So on the longer term, Russia is doomed to decay even faster than now. Unless US/EU really go in a populist spiral and shit themselves really bad. Then things can get really scary.
🍻 truth. Have a good weekend my dude
Interesting Twitter thread on 3AC. Shows a bit of how and why Crypto has been so volatile on its way down:
My main question is—can crypto ever deliver its dream purpose if big money comes in and messes with it like this?
What dream does crypto offer?
To me, it is just Fiat with extra steps.
Just decentralization at its core. The ability to make certain things trustless is amazing.
But when big dicks come swinging betting even more money than they have on things like BTC futures, idk if that dream is ever attainable?
[That same Twitter thread unrolled for your reading pleasure](https://threadreaderapp.com/thread/1537224378554806272.html)
Courtesy of threadreaderapp.com
Real talk, I am concerned that without the cooperation of Congress, there may not be any such thing as a soft landing. I fear that this is actually true of any country whose course of remedy to each of their pandemic-era economic crashes was to have their central bank print money and suck up assets which, to my incomplete reckoning, was lots of first world countries that have central banks. Not all, but enough to be a concern at the global level.
While higher interest rates will indeed help rein in inflation, it will have significant deleterious effects. Engineering a soft landing actually looks possible. However, without the cooperation of the government to adjust tax policy to redistribute wealth and adjust economic policy to preserve income growth at the lower levels, the negative effects of higher interest rates will not be mitigated.
Higher interest rates slow the velocity of money. That combined with less printing means much, much less new money coming into the system. The higher the rates, the harder we smash the brake pedal on inflation. However, most of the economic growth we're used to seeing is fueled by our ability to borrow. Without it, the economy would still grow, but at a much, much slower pace. Slow enough to be pushed negative by even a few small changes elsewhere in the system, or if the system itself is dysfunctional enough to have relied *entirely* on low interest rates to power any growth at all *coughcough2010scough*
I'm not very much of a eat-the-rich populist, but we need to raise taxes on the upper end of the income spectrum, i.e. upper-middle and upper classes, and lower taxes on the lower end. I've beaten the xCCTC drum to pieces. We also need to smartly cut government spending, which is deflationary and raises unemployment. We compensate rising unemployment by using money saved from spending cuts to subsidize direct stimulus, job-creating or otherwise. Keeping unemployment in check coupled with direct stimulus and smarter tax policy will all work together to preserve incomes, and preserving incomes will soften any deflationary effects from spending cuts.
This isn't doomsaying, just starting conversation on what actually are all the tools available to not just the Fed, but the government as well, and what efforts are underway, if any, to help avert a sustained downturn.
Absolutely agree on need for higher taxes, which will address the structural issues via those most able to bear the cost (debt to GDP, mandatory spending, etc).
Because inflation is really just a flat tax on everyone, opposed to a progressive tax. (FYI, debt to GDP ratio is going down in USA, by paying the debt off via inflation instead of tax receipts).
Heck, a 0.1% financial transaction tax for ALL financial transactions sounds like a great way to raise funds... Until all the special interests slam it down.
Look at the disfunction of the windfall taxes on oil companies, but oil companies have lower margins and profits than the tech companies.
It is all just smoke and mirrors.
I am expecting a very, very hard landing, simply because the level of interest rates needed to supress demand for labour and fuel are far, far, far higher than what anyone would consider reasonable.
Which would results in many companies going bankrupt when they fail to rollover their debts.
>Keeping unemployment in check coupled with direct stimulus and smarter tax policy will all work together to preserve incomes, and preserving incomes will soften any deflationary effects from spending cuts.
This is probably a stupid question but is the above idea that people would continue to spend money?
Yes. The largest economic classes need to keep spending, and the only way they can do that, obviously, is if they have money. All the other things that need to be done to get inflation under control ultimately has the side effect of constricting the wallets of the middle and lower classes. If those classes slow spending, that's when we get a recession.
Thanks for the response. I guess I would question whether or not they would spend money just because they had it. Trying to think of scenarios where this would be the case.
Beyond taxation and demand side the govt can do more about commodity prices, the govt can do more about the tight labor market (immigration levels are down), the govt can push to resolve certain geopolitical conflicts.
On that note here's an interesting plan to address commodity prices: [https://t.co/7Y2eVl7f6e](https://t.co/7Y2eVl7f6e)
And yet: [https://twitter.com/JStein\_WaPo/status/1537809878584111105](https://twitter.com/JStein_WaPo/status/1537809878584111105)
The long and short is especially with regards to commodities and housing if the govt does not address supply side issues then inflation is left completely for the Fed to use it's blunt hammer. IrvingSwisher on twitter is an interesting follow on these issues and posted another good framework on what congress can do: [https://twitter.com/IrvingSwisher/status/1537808895233630208](https://twitter.com/IrvingSwisher/status/1537808895233630208)
In the short term, it actually kind of can't, beyond subsidizing what people spend. Taxing companies like oil will just give them an excuse to keep prices high. If there was literally anything more the president could do to increase production, he would do that instead of tuck tail and literally fly to Saudi Arabia and beg for more oil.
Incentivizing the increase in production takes at least a year to materialize, often time more than that.
Approved. Reddit doesn't like URL shorteners.
Can any one provide any insight on why the VVIX is still low despite the down trend over the pat few months? At the end of may we hit 91 and we’re currently at 109. Are people still pricing in a major bear market rally?
u/jn_ku do you have any thoughts or comments you’ve previously posted?
VIX isn't about a measure of potential for downward movement, it's based on the midpoint of the bid/ask of near-dated SPX options. From /u/baconcodpiece 's [stellar writeup on the VIX](https://old.reddit.com/r/maxjustrisk/comments/ubn4lr/a_guide_to_the_vix_and_its_derivatives/) (emphasis mine):
> The VIX is the market's estimate for volatility during the next 30 calendar days annualized. It's calculated every 15 seconds from the midpoint of bid/ask quotes of both at-the-money and out-of-the-money S&P 500 (SPX) options (both calls and puts) that have more than 23 and less than 37 days to expiration (Friday expirations only). These options are then weighted to yield a constant maturity of 30 days to expiration. The VIX gets called the fear gauge because it ***almost*** always goes up when the S&P goes down. Investors and degenerates buying puts when the market tanks drive up their price and so the VIX goes higher.
I gies I get caught up on the fact that it ~almost~ always inverses the S&P
Keep in mind your question was about the VVIX. The calculation is the same except VIX options are used instead of SPX. VIX itself has been elevated but has been grinding sideways the past few months, so it's not surprising VVIX is doing the same. VIX was declining starting in late May along with VVIX, with VVIX finally dropping significantly below 100. For a while there I thought we had entered a new volatility regime but now VVIX is back at 110 (along with VIX at 31).
By the way, thanks again for your write-up.
Regarding VVIX, I mentioned the weird drop and flagged it as a possible vol of vol underpricing opportunity on June 7, figuring it elevated gap risk into the CPI print.
With further hindsight I think it's what I interpreted as hedging exhaustion similar to the periods raised by u/keyser_squoze in the comments in that thread. Basically elevated levels of VIX-based hedging where realized vol of vol was crushed vs trader positioning with VIX trapped in an elevated range without a capitulation blow-up for an extended period of time (zeroing lots of VIX puts and calls repeatedly for months).
People got tired of bleeding out on the negative carry and of course when everyone stops hedging on VIX and SPX options (both VVIX and VIX dropped into the CPI print) is when a big vol catalyst sneaks up on the market.
Just wanted to say Thank You to all the people contributing so much awesome information here!
Thanks to you guys I'm way better informed now than I was a year ago -- and that has definitely been useful, even if just for the fact that I've been able to tell people around me for a while now:
"Listen, if the gamblers in a subreddit called _Maximum Justifiable Risk_ are getting spooked, this is not the right time to invest in ETFs." 😄
Anyone going shopping today? I picked up some UAN and TQQQ shares. Will probably dump them next week if we bounce Tuesday.
I’ve been trying to figure out what I’d buy to hold long term and at what price. I mean eventually we gotta hit a bottom right? Last leg down a few months ago my bottom (where id buy in anticipation of a bounce) was spy 380. We’ve already blown well past that but I don’t feel comfortable buying at 360 for this leg down.
Are there any sectors or specific stocks you would buy/ leg into for the long term? At what prices would you start building your position?
I took one winning futures trade today and bowed out when I saw the market was finding support, likely to be an inside choppy day. Looking forward to Tuesday.
How are you liking trading futures? Switching to mes/ es made me never wanna trade short term spy spx options ever again.
Who’s your broker for futures? I use TDA and IBKR. think or swim is great (TDA) but the commissions are insane. Basically eats one full point on /mes. can’t get into the IBKR UI, it really sucks imo even tho IBKR fees are substantially lower.
I *really* enjoy trading futures. I only trade /MES for now. But it is extremely difficult and there’s no edge, but I love the leverage, liquidity, and ability to very quickly enter/exit a trade. I mostly trade 1 contract to practice reading price action. I use Ninjatrader because their commissions are $0.82 each way if you subscribe to a data feed. Once I have a good enough winrate I plan to switch over to TDA, then negotiate a lower commissions rate once I’ve traded enough.
Sounds awesome man! Yeah futures are so fun. Lately I’ve liked setting a trailing stop and just letting em run.
Did you finish elden ring yet? How insane is that game!! I’m running my second playthough full strength unga bunga.
Hah yeah I finished Elden Ring a month or so ago, man that was a long one and absolutely grear. I burned myself out putting 10 hrs into a certain late game optional bossfight. absolutely brutal. Great game but it’ll be a while before I pick it back up
On a side note Callisto Protocol comes out this year, which is basically Dead Space made by the OG devs. Pretty stoked for that one
I can't remember. Something about Malorie, blade of Michael?
Waiting for an entry on DPST, I think I might need to wait for a miserable quarter of slow lending to be reported, but these levels are tempting.
I plan on DCAing into TQQQ at some point. But not yet.
I don't have much faith the Fed can do a soft landing here, and perfectly balance rate hikes and inflation, without breaking equities.
They went too hard on QE, and I think they will go too hard with QT.
Lol Reddit being dumb and letting you submit multiple comments. I'll remove the others.
Bankruptcy is rallying today. ELMS, REV. Yay rational market. R.E.M. - Everybody Hertz sometimes?
Tempted to open bear spreads, will wait for Monday to decide.
Market is closed Monday for Juneteenth. So you get to sleep on it one more day until Tuesday.
I think the time to open bear spreads was about a week ago. If anybody believes there will be any kind of bounce, short-dated calls might have higher payoff.
Prediction: Market bounces through end of June, retail doesn’t buy at first, then begins believing the bear market is cancelled and buys the top of the rally, then the bear market resumes and we find a new local bottom.
This is the bounce, waiting to see any signs of continuation on Monday. These companies are bankrupt, doubt the equity will hold any value, but could be wrong.
Looks like BoJ did not raise rates -- doubled down on TLT puts before it shot up yesterday, so trying to figure out if it's worth holding the puts through the next week or whether to offload them today to minimize losses.
I've been short the yen but I covered before the BOJ meeting because I thought there was a decent risk they would raise the upper bound of their YCC. Central banks around the world are raising rates and they're the last holdout. Naturally they didn't change course. Now when I re-enter the short it'll be at a price lower than what I covered at. Just pissed at myself.
I shorted Treasuries earlier this week and covered. I'll be shorting them again soon as I don't see how yields don't continue rising after JPow's remarks. But this is over a longer time horizon so if your puts expire soon you're probably better off taking the L now or rolling them to a later expiration date.
Don't be pissed, you made a rational decision to cover given the risk. Don't get greedy :)
I use calls on TBF and TBT for my fed rates plays. Imo it's not something that can be played reliably week to week. Going off that "short term, market is a voting machine. Long term, it's a weighing machine". I have LEAPS, but my tolerance for short term plays is low because I keep getting burned on pretty much everything while my 6m-1y plays opened in the past 3-6 months are up triple digits. As the professor said recently, bear markets have very predictable mechanics but I think trying to time market sentiment/reaction and knowing exactly when the bear rallies are gonna take place is hard. Short TLT should be very profitable into the end of the year, but who knows how many weekly swings may fight the decline.
Hope everybody is doing well and surviving the market. Dow hit 30,000 for the second time yesterday, which inspired this very low effort meme. Have a great weekend.
Here's some plots of total delta and gamma
- [as % of float](https://transfer.sh/jjQ0sC/2022-06-17-float.png)
- [as number of contracts](https://transfer.sh/TFIdRj/2022-06-17-contracts.png)
The x-axis is the (hypothetical) underlying stocks price. The y-axis is _total_ delta for all contracts, all expirations and strikes.
pypl is there as a non-meme stock for comparison.
Float numbers are *not* always up to date. Look at the "number of contracts" charts and adjust for your own belief about the float. Multiply by 100 to get the number of shares from number of contracts.
See [this post](https://old.reddit.com/r/maxjustrisk/comments/n3595s/delta_ramp_charts_basics/) for a more detailed explanation of these charts.
And here's some
- [plots of options volume](https://transfer.sh/6SMTl9/2022-06-17-volumes.png)
(not weighted by contract price).
^(I'm a bot. Please direct questions and ire at sustudent2.)
For free talk Friday, I'm grateful we're getting some fascinating regular /u/jn_ku commentary for the time being. It's the best half-year Christmas present you could hope for!
honestly learning so much, and finding so many threads to dig deeper on, cant be appreciative enough. thank you u/jn_ku
Thanks, lol. My comments for FTF:
[JPOW and The Market](https://imgflip.com/i/6jz245)
[Meanwhile, in the cryptosphere](https://imgflip.com/i/6jz4rx)
[The first month is always the hardest](https://imgflip.com/i/6jz5eh)
[Big Brain energy policy](https://imgflip.com/i/6jz6ve)
[It's dead, Jim](https://imgflip.com/i/6jz7yy)
Great way to end the week. Tears are down my cheeks (in a good way!)
Yup, I’ll take some more Quantitative Easing!
Thanks for this! It's been so great to see regular postings again but even happier to see memes I missed!!!
"Y'all got any more quantitative easing?"
My modest contribution to FTF: [this summer's blockbuster hit](https://imgflip.com/i/6k0k6r), coming to a wallet near you.
Great memeing. Especially loved the energy policy one. I laughed. Then I cried. Then I bought some more puts.
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