Wednesday, January 27, 2021

Tag: CONfidence Eh? Nope

CONfidence Eh? Nope

by Karl Denninger, Market Ticker:

Forever there has been an immutable half-joke in the markets: There is very strong support at zero.

Yesterday the CME violated that by allowing oil futures to trade with a negative price.

This, of course, came after we allowed central banks to print “negative” interest rates — that is, to literally destroy money they were given to hold.

This was a catastrophic error on the part of the CME and may prove to be fatal to financial markets and our nation generally.  If you cannot set a maximum point of risk then all financial transactions must be re-computed as having infinite — that is, unbounded risk.