For Better/For Worse: Markets Show Extreme Volatility In A Rapidly Changing World

For Better/For Worse: Markets Show Extreme Volatility In A Rapidly Changing World

Between late February and mid-March, the world drastically changed. And financial markets reacted by becoming much more volatile as unknowns emerged in the Brave New World. Markets displayed about 60% more volatility in the week just ended (March 11) than they did in the February 18 week before the Russian invasion (referred to as R/U in this blog). These three major risks have dominated the news, and impacted most Americans' lives: Those "risks" have caused volatility in the financial markets, i. e., a "bear" market in both stocks and bonds, as the latest news, especially surrounding R/U, inflation, and the Fed gets "priced in." The fact that Russia and Ukraine are significant exporters of energy (oil, natural gas), grains (wheat, corn), and metals (palladium, titanium, neon gas) has caused commodity prices to spike to record levels. Nickel is the poster child here, with its price spiking to such an extent that the London Metals Exchange (LME) stopped trading in the commodity and even broke some of the trades as a significant short-seller couldn't meet margin calls. It now appears that there will be a Russian default on the payment of coupons due this week (week of March 13) on their