Topic
Financial Instability
A collection of 67 issues
Newsletter: Fuzzy Sets and AI - Measuring Market Uncertainty
As complexity rises, precise statements lose meaning and meaningful statements lose precision. - The Law of Incompatibility, Lofti Zadeh
In this month’s newsletter, I’m discussing the use of fuzzy set principals embedded in the Market Climatology model. Fuzzy sets are a sub-set of artificial intelligence (AI) that mimics
Blog: This year's Debt Limit Crisis is different, to markets.
Will this debt limit crisis lead to a bout of "creative destruction" in the Austrian economics sense?
Blog: An El Nino level regime change for the markets?
In the Market Climatology section of the Hypertext Book, I use the El Nino Southern Oscillator (ENSO) as an example of a climate level regime change. It appears that ENSO is undergoing such a regime change, from La Nina, which just ended, to El Nino, which will probably start in
Newsletter: Murphy's Law Meets Hyman Minsky
As Gilda Radner said, "It's always something."
Blog: The Debt Limit-The end of trust and the “risk-free” rate?
Trust is what's at stake with the debt limit.
Blog: Markets are Fragile, again – Credit and Debt Ceiling risks mount up
When markets are Fragile and leverage is high, a downside shock can cause calls for collateral as asset values decline leading to more selling. Minsky Moment risks are rising.
Newsletter: Liquidity and the MOVE Index - An Early Warning Signal of Financial Crisis
Liquidity has been in the media a lot lately. It’s one of those things we take for granted, until it’s dried up. In Fractal Market Analysis (1994) I made the point that markets don’t exist to give you a fair price (an assumption of the Efficient Market
Blog: The Fed's Three Body Problem - Inflation vs. Employment vs. Financial Stability
In physics, the “three body problem” involves predicting the motion of three objects, or bodies, when the bodies are attracted to one another by gravity. Newton solved the two body problem, but not the three body equivalent. The French mathematician, Henri Poincare, studied this problem in the late 19th century,
Blog: The MOVE Index is not what it seems - Part 2
On Sept 1, 2022 I posted that the MOVE index is often misinterpreted. Last week's SVB failure makes this discussion relevant and worth continuing.
The MOVE is an implied volatility index of US Treasuries. The index uses options on 2, 5, 10, and 30 year on-the-run US Treasuries.