Of Supernovas & Deflation

My latest post for Alpha Baskets covers a lot of ground and includes the following;

A former colleague emailed me to ask what would happen to bond ETFs in the face of some sort of meltdown triggered one way or another by the myriad of distortions currently at play, or potentially at play in the bond market. Based on previous, albeit short lived, events we probably have a good idea. Market prices could trade away from IIV’s (ETF equivalent of NAV) but still trade. In that scenario you’d be able to get out might feel hosed in doing so. Of course you could just wait few days and probably trade closer to IIV. A fund could stop the creation/redemption process which could also cause a large divergence between the market price and the IIV but again, in that scenario you’d be able to get out.

Please click through to read the entire post.

Apparently it was selfie-day earlier this week. Yours truly in April at the Ferrari Museum in Modena, Italy.


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