Sell China volatility, buy VIX for a positive-carry hedge against systemic risk
David P. Goldman writes that the gap between the VIX and implied volatility of Chinese equity options (FXI) has reached an all-time high, indicating potential opportunities for exploitation. China’s country risk is priced into FXI options, while systemic risk in the US remains low.
In Brief: No ASEAN bid for Biden offers
Uwe Parpart discusses the lack of progress made by the United States in further polarizing Asia and lining up support for its Indo-Pacific anti-China alliance during recent events, including the ASEAN Summit, G20 Summit, and President Joe Biden’s visit to Hanoi.
Conflict risks low in the immediate future but could rise in Q4
David Woo cites the RIWI-Unbound Military Conflict Risk Survey, which indicates the share of respondents expecting a military conflict to intensify in the next few weeks is currently at the lower end of its range, suggesting that tail-risk hedges may offer good value.
Battlefield update: Russia sets up for offensive
James Davis sees signs of potential escalation in the near future, with the Russians appearing ready to launch a massive offensive in the upcoming fall. How NATO, especially the United States, will respond remains uncertain.
How might the US tighten the screws on China?
Scott Foster details how US government sanctions on China raise concerns about their effectiveness and potential unintended consequences as CEOs warn that restricting sales could lead China to natively develop its own innovative solutions.