It’s been a fun week in financial markets – unless you are long, that is – as investors tried to make sense of the virtually non-existent data concerning the new variant of the Virus, which led to a massive surge in volatility.
Oil, which has been a great indicator of sentiment ever since the start of the pandemic (remember the negative prices?), dropped nearly 25% in three weeks, so Mr. Market thinks that the outlook is not great. In fact, according to Goldman Sachs, the market is “pricing in” a total travel shutdown of three months, which seems a bit excessive.
Making things even more interesting, the OPEC will likely chime in today as well, and with last week’s skirmish regarding the Coordinated Global Reserve Release in mind, it would come as a surprise if the nice folks at the Cartel didn’t try to intervene, at least verbally.
The Nature of Risk 