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Month: February 2018

Milken in Abu Dhabi

Milken in Abu Dhabi

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I was thrilled to participate in the Milken Insitute’s inaugural MENA summit, held in Abu Dhabi earlier this month. It’s not every day you get to range across a variety of topics (A global market selloff! Bitcoin! Capital Markets! Trump!) with this caliber of speakers.

Of particular pleasure for me, was the chance to moderate a panel with some of the top minds in credit — Sir Michael Hintze, founder of CQS, Paul Horvath, CEO of Orchard Global Capital Group, Steven Shapiro, partner at GoldenTree Asset Management, and David Warren, CEO of DW Partners.

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And some notable TV interviews beginning with Mike Milken himself:

https://www.bloomberg.com/news/videos/2018-02-08/milken-institute-chairman-sees-record-liquidity-video

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And Sir Michael Hintze of CQS:

https://www.bloomberg.com/news/videos/2018-02-09/cqs-u-k-s-hintze-not-surprised-by-stock-selloff-video

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And Cameron and Tyler Winklevoss:

https://www.bloomberg.com/news/videos/2018-02-07/winklevoss-brothers-on-bitcoin-price-cryptocurrency-regulation-video

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And last but certainly not least Tom Barrack, Colony NorthStar Chairman:

https://youtu.be/ry8D4eoR_j0

A quick thing on the long-awaited, entirely predictable ‘Volpocalypse’

A quick thing on the long-awaited, entirely predictable ‘Volpocalypse’

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How many warnings did buyers of XIV, the volatility-linked exchange-traded note (ETN) note that went bust last week get? A lot.

First there was the prospectus itself, which spelled out wipe-out risk fairly clearly. Then, there were multiple articles from multiple financial news and analysis outlets, myself included.

There were also tweets!

Like, lots of them!

The below tweet was from Jan. 31st — about five days before the actual blow-up! The only response I got to this at the time was from a guy complaining that he couldn’t see the x-axis so the chart was meaningless. That wasn’t the point! And if you don’t understand what a change in the shape of the VIX futures curve might mean for volatility-linked products, then you probably shouldn’t be trading them!

I tried to sum up just how telegraphed this was in a short note for our markets morning newsletter, which you can sign up for (for free) here.

I don’t mean this to sound callous to those who lost their shirts on this product, but neither do I want this to be spun as a failure on the part of forecasters and journalists etc. This was a well-telegraphed event that people saw a mile coming. That doesn’t mean there wasn’t failure somewhere. The fact that some retail investors seem to have been taken completely by surprise in the recent turn of events suggests they probably shouldn’t have been in these products in the first place. Whether that’s a failure on the part of the regulator, the ETN-issuer, the brokerages that enabled trading in the products, or some other party, I leave that to others to decide.