Blog: Risk down. Uncertainty high. What could go wrong?

News last week was mostly about what's not happening rather than positive news or information.

• The President said he is not thinking of firing Fed Chair, Jerome Powell. The media, he said, "misinterpreted" his statement. So hopefully we won't have to worry about politicians running monetary policy. At least not yet.
• No new tariffs were announced by anyone, and the President suggested that duties on Chinese goods might be lower.
• The impact from tariffs on inflation has not yet manifest in reported inflation.

The markets rallied accordingly and implied volatilities fell across the various indices I follow. Because capital market theory defines risk as volatility (or the standard deviation of returns), you could say that risk is down. But there are caveats.