Financial market moves that aren’t supposed to happen

“Interesting things have certainly been happening in the underpinnings of global markets – things that either run counter to long-standing financial logic, or represent an unusual dislocation in the “normal” state of market affairs, or were once rare occurrences but have been happening with increasing frequency.

Here’s a rundown.

1. Negative swap spreads

What’s new, and negative, and makes no sense? Swap spreads below zero, of course.

While the term may mean little to your average retail investor, swap spreads have become the talk of financial markets in recent weeks as they plumb historic lows and seemingly defy market logic,” wrote Tracy Alloway for The Globe and Mail on Thursday November 12, 2015.

Alloway continued, “4. Market moves that aren’t supposed to happen keep happening

Much of Wall Street runs on mathematical models that abhor statistical anomalies. Unfortunately for the Street, such statistical anomalies have been happening more frequently, with short-term moves in many assets exceeding historical norms.

Barnaby Martin, a credit strategist at Bank of America Merrill Lynch, made this point earlier this year. The number of assets registering large moves – four or more standard deviations away from their normal trading range – has been increasing. Such moves would normally be expected to happen once every 62 years.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS


Pictorial tribute to the fallen soldiers in Midland

Nikki Cole photo

Nikki Cole photo

“In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.”

– Lieutenant-Colonel John McCrae

See the pictorial tribute here.

Raymond Matt, CFP, CLU, TEP, CHS

Will Trudeau invest in Canada’s important public needs?

“Canada’s new Liberal government is destined to be very different from the Conservative one it defeated in last week’s election. Its most distinguishing economic promise is to run budget deficits of roughly $10-billion for each of the next three years, much of which is earmarked for new infrastructure. But there is a related and bigger challenge for Canada, and I hope prime-minister-designate Justin Trudeau will be taking it seriously in the years ahead.

Mr. Trudeau’s commitment to increase infrastructure spending is economically sensible for two reasons. First, it is clear to most people, certainly those living in our large cities, that Canada has serious infrastructure needs; much of it is already crumbling,” wrote Christopher Ragan for The Globe and Mail last Thursday October 29, 2015.

Ragan continued, “Turning things around is anything but simple. How do we convince Canadians of the enormous value of our shared public goods, and that having such things is an important part of how we help the least fortunate among us? How do we convince people that our sports facilities and libraries and museums and parks are important for building a country in which we develop similar values and aspirations? And how do we convince Canadians that having these valuable things is worth paying a little bit more in taxes – and that our duly elected governments can be trusted to use that money wisely?

This is an enormous challenge for any political leader, but I hope Mr. Trudeau rises to the occasion. And I hope he brings along the provincial premiers and civic mayors to join him in the project, for they have an equally important role to play.

Mr. Trudeau ran a remarkable election campaign, in which he was resolutely positive in tone and optimistic about Canada’s future. He clearly believes that government, when run well, can play a crucial and constructive role in building a better country.

Perhaps he is just the prime minister we require to make a real difference to Canada’s important public needs.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS



Photo credit: Alex Guibord / / CC BY-ND

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