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Hedges Are “Pricing A World Almost Free Of Risk” Says BofA: Here’s How To Trade It

Sunday, March 12, 2017 18:41
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(Before It's News) / by Tyler Durden / Mar 12, 2017 5:57 PM

Over the weekend, Bank of America’s volatility experts Jason Galazidis and his team, pointed out that while US equity vol remains at historic low levels, it is not just equities where market participants are remarkably complacent, and write that both US credit & Chinese equity hedges “are pricing a world almost free of risk.

To Galazidis this is perplexing  as “there appear to be abundant potential sources of global market uncertainty: a CB policy miscalculation, the propensity for political surprises, unanticipated consequences of the first US rate hike cycle in over a decade and the feasibility of Trump’s economic growth agenda, to name a few.”

And as Goldman pointed out recently when it demonstrated that the cost of liquid long-dated hedges in equity and credit has collectively reached its lowest level in six years…

… BofA agrees that risky assets for the most part remain euphoric, exhibiting what the bank’s Michael Hartnett has famously termed an “Icarus” moment before “hubristic positioning, complacent profit expectations, and hawkish policy signal a reflection point.


The post Hedges Are “Pricing A World Almost Free Of Risk” Says BofA: Here’s How To Trade It appeared first on Silver For The People.


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