Market stress?

The week is starting trying to recover from the 7 standar deviation movement in the price of silver on Friday. The probability of that event happening is lower than 1 divided by the age of the universe (by far). Let that sink in. Of course we know the real world does not follow a perfect normal distribution of returns. This is what’s called a fat tailed event. Why is that important? Because it implies that something more complex is going on in the market. This morning we saw bitcoin trading around 76,000 dollars, which is supposed to be the average price at which MSTR (strategy Inc) bought its bitcoin reserve. So what? They hold 712,647 bitcoin, supported or financed with their own shares, and it seems like the market is trying to see if the engineering is able to hold. Perhaps there were some common investors in silver and BTC that were forced to liquidate, and there was some contagion involved. And this morning, the WSJ writes about the possibility that NVDA does not invest the $100Bn in Open AI that they announced recently, due to the massive cash burn Chat GPT is causing. Which in turn is linked to the $50Bn capital raise announced by Oracle, which invested massively in data centers for Open AI, that are not profitable, and their CDS (credit default swaps) continue to be elevated, signaling stress. The Yen is weakening again, perhaps because investors have realized the Japanese government is not going to intervene at this point. The yen carry trade is alive, at least for now. There seems to be a lot of things going on that point to stress in the market. And we are still very close to a all time highs in US indices.

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