The latest ‘Flash Crash’ and the ‘byzantine edifice’ of global derivatives
“I’m concerned that Thursday’s [1-3-2018] currency ‘flash crash’ has potentially dire implications. Together with other key market indicators, evidence of systemic illiquidity risk is mounting. De-risking / deleveraging dynamics continue to gain momentum globally. Moreover, there are literally hundreds of Trillions of currency-related derivatives transactions – a byzantine edifice fabricated on a flimsy assumption of ‘liquid and continuous markets.’ I suspect the ‘global’ derivatives marketplace is today much more global than the U.S.-dominated market heading into the 2008 crisis. This implies scores of new players, certainly including Chinese and Asian institutions. This suggests different types of strategies, complexities, counterparties and risks more generally.”
USAGOLD note: If you are a serious student of the financial markets and/or investor, you might want to put Doug Noland’s weekly newsletter on your reading list. Insights like the one immediately above are worth the visit. . . . . . . . . .
Repost from 1/9/2019