Market Makers ‘Didn’t Show Up for Work’: Macro Risk CEO Curnutt

The video discusses the challenges of liquidity and dollar funding, particularly during the 2008 financial crisis and subsequent issues with European banks in 2011-2012. It highlights how reliance on dollar funding has been reduced over time. The video also examines recent market conditions, noting the absence of market makers and the impact on liquidity, especially in typically liquid options and ETFs. The discussion emphasizes the self-reinforcing nature of market derisking when transactions cannot occur.

What was a significant event related to dollar funding stress in 2008?

• The peak of dollar funding issues

• The rise of Asian markets

• The collapse of the European Union

• The introduction of cryptocurrency

Which years saw European banks facing significant dollar funding issues?

• 2005 and 2006

• 2008 and 2009

• 2011 and 2012

• 2015 and 2016

What unusual market behavior was observed in typically liquid options?

• Increased trading volume

• Wider bid-offer spreads

• Narrowing bid-offer spreads

• Stable market conditions

What was the market makers' response in the junk bond ETF market?

• No change in behavior

• Increased participation

• Complete withdrawal

• Partial engagement

What is a consequence of not being able to transact in the market?

• More investment opportunities

• A self-reinforcing cycle of risk reduction

• Higher liquidity

• Increased market stability