The recent volatility in financial markets – be it the dizzying swings in equities around the world or the fragmentation of European sovereign bonds – far exceeds what is warranted by the ongoing global re-alignments. We are also seeing the impact of a consequential shift in underlying liquidity conditions – or the oil that lubricates the flow of the credit and the related ability of savers and borrowers to find each other and interact efficiently. Facing a range of internal and external pressures, banks seem to be limiting the amount of capital that they devote to market making. Combine this with the natural inclination of many market participants to retreat to the sidelines when volatility and uncertainty increase, and what you get is a disruptive combination of higher transaction costs, reduced trading volumes, and abrupt moves in valuations.
Prepare for a different financial landscape | Mohamed El-Erian
Calling on all financial-creatives to disrupt (save) our markets with new products for managing our global markets more efficiently. Is is possible that the failed models of physicists, mathematicians, and programmers will give way to market-saving products?
J N O M I C S
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