Sunday, March 13, 2016
The themes, issues, and opportunities for this week
Themes, issues, and opportunities often do not change from week to week, but it is important to still identify what should be the key drivers in the mind of traders and portfolio managers. These themes are often not associated with the announcements for the week but represent the bias or filter through which new information will pass through.
While we have mentioned four, the RO/RO trading environment may be the most important. Volatility has fallen from the highs earlier in the year with the VIX below 20%, but that does not change the fact that an unexpected announcement or an odd policy announcement will cause a switch to risk aversion. The switches will often be short-term but violent which leads to both trading loses and opportunities.