‘False Peace’ for Markets? A Trader Is Betting Millions on It

Bitcoin and other digital currencies are gaining popularity, but the exchanges where they trade have many weaknesses. Credit Dado Ruvic/Reuters
Bitcoin and other digital currencies are gaining popularity, but the exchanges where they trade have many weaknesses. Credit Dado Ruvic/Reuters
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‘False Peace’ for Markets? A Trader Is Betting Millions on It

Bitcoin and other digital currencies are gaining popularity, but the exchanges where they trade have many weaknesses. Credit Dado Ruvic/Reuters
Bitcoin and other digital currencies are gaining popularity, but the exchanges where they trade have many weaknesses. Credit Dado Ruvic/Reuters

Last Wednesday was another good day to make money on Wall Street: Stocks pushed up, interest rates were at rock bottom and the VIX gauge of investor unease was again trending downward.

But as investors celebrated yet another bounce-back from a market slip, Christopher Cole, a trader who runs a hedge fund here that makes bets on various forms of financial apocalypse, spotted something amid the sprawl of data and code that decorated the wall of screens before him.

“Optically, volatility is still very low, but fear is increasing,” Mr. Cole said, pulling up a chart on one of his six trading windows. It showed that in the months beyond the 30-day period measured by the Chicago Board Options Exchange’s VIX index, investors were expecting some violent moves to come in the stock market.

Betting against a flare-up of such turmoil has been one of the longest-running and most profitable trades in recent financial history.

Mr. Cole, who opened Artemis Capital to outside investors in 2012, is taking the opposite side, arguing with the passionate intensity of the true believer that this market calm cannot last.

In doing so, he draws parallels to the stock market crash of 1987, when investors were similarly lulled into believing that volatility would not erupt.

So far, those betting against chaos have carried the day.

From day traders perched in front of their living room laptops to sophisticated institutional investors the world over, many have made piles of money betting that the VIX will keep moving lower.

After peaking at close to 90 at the time of the financial crisis, the VIX recently sank to a multidecade low of just below 9, the occasional sharp spike upward notwithstanding. (As of Wednesday afternoon, it was 10.5.)

Several factors have helped along the way, analysts say. They include aggressive money printing and bond purchasing by global central banks and the profusion of exchange traded investments, which make it cheap and easy for professionals and amateurs alike to bet on a falling VIX.

Now, just a month ahead of the 30th anniversary of Black Monday, when the Standard & Poor’s 500 stock index plunged 20 percent, Mr. Cole is wagering on a similar calamity, underpinned by a vicious spike in the VIX and a steep sell-off in stocks.

“The fact that everyone has been incentivized to be short volatility has set up this reflexive stability — a false peace,” he said. “But if we have some sort of shock to the system, all these self-reflexive elements reverse in the other direction and become destabilizing as opposed to stabilizing.”

Calling an end to the second-longest bull market in modern financial history has, understandably, become quite fashionable. Not just on the perma bear fringes, either. Wall Street houses talk regularly about overvalued stock markets, and establishment voices like Lloyd C. Blankfein, the chief executive of Goldman Sachs, have mused openly that “things have been going up for too long.”

A little-known British investment firm, Ruffer Capital, has caused a stir by predicting a shattering denouement, and many hedge funds are buying up cheap VIX options, which will pay off handsomely if the index shoots up.

Artemis Capital is of a slightly different stripe. It is, as Mr. Cole likes to say, a hedge fund with a capital H. That means, in times of bull market fever, the fund will bet on a reversal, offering downside protection for cautious investors by finding creative ways to purchase exposure to financial chaos. These trades entail purchasing a variety of derivative instruments that pay off if there is a dramatic upward spike in the VIX, which can cause stocks to fall precipitously.

Of late, money managers seeking such a hedge have grown markedly. Mr. Cole, who started with $1 million in 2012, is now sitting on $200 million, and demand has been so strong recently that he expects to hit $300 million soon, at which point he will restrict further access.

Mr. Cole, 38, has the bouncy enthusiasm of a young child, and he spends each waking day reading, coding and free associating about what it will be that marks the bull market’s end.

Like many dyed-in-the-wool market skeptics, he has his quirks. To remind himself to make full use of each day, he wears a watch that counts off the time he has left to live — 50 years and 4 months.

At the moment, Mr. Cole calculates that as much as $1.5 trillion in investor money is betting the markets will remain as they more or less have been since 2009: volatility free.

This sum, he says, includes about $60 billion in funds that are explicitly short volatility in its many forms. The bulk of this amount is in funds that deploy strategies where volatility is a critical input for allocating exposure to the stock market. So the lower volatility is, the more these funds load up on stocks.

Piling on to the low volatility trade have been corporations, which this year may buy back close to $1 trillion worth of stock, analysts estimate.

In 1987, portfolio insurance transformed a market decline into a historic rout when computer driven programs sold stock market futures into a panicked marketplace absent of willing buyers. Mr. Cole says this $1.5 trillion in short volatility money can play a similar role today if the fear gauge index spikes sharply.

All of a sudden VIX sellers will become VIX buyers, which will send the index soaring and stocks plummeting.

As he sees it, the formulaic strategies that sold stock market futures into a falling market in 1987 and the short volatility money of today are akin to barrels of petroleum that can turn a mere fire into a seismic conflagration.

“In 1987, we were in a bull market, and the Fed was behind the curve with regard to inflation and interest rates,” Mr. Cole said. “What could cause a crisis now is if rates suddenly spike higher, share buybacks seize up and then the volatility sellers turn into volatility buyers all at once.”

It is, in many ways, a moral argument for him.

Volatility sellers reap cheap and fleeting gains, which he compares to speeding, obesity and marrying for money. Those willing to suffer the immediate pain of being long volatility — before the reward of calamity comes — Mr. Cole sees as being more virtuous.

To say that Mr. Cole is obsessed with volatility — as both a financial and a philosophical construct — would be an understatement. In his investor letters and papers, he cites the poems of Goethe, the movies of William Friedkin and George Lucas, and Joseph Campbell’s works on mythology as teaching tools for interpreting the whims of sudden change.

Ultimately, though, he believes that those who have held volatility in abeyance for so long — from risk parity funds to global central banks — will face a reckoning.

“Volatility is an instrument of truth, and the more you deny the truth, the more the truth will find you through volatility,” Mr. Cole said. “If central banks want to keep saving the day, that is fine. But volatility will then be transmuted through other forms like populism and identity politics and threaten the fabric of democracy. And that is something that my hedge fund will never be able to protect against.”

The New York Times



China's BYD Poised to Overtake Tesla in 2025 EV Sales

The Tesla logo is seen in this illustration taken July 23, 2025. (Reuters)
The Tesla logo is seen in this illustration taken July 23, 2025. (Reuters)
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China's BYD Poised to Overtake Tesla in 2025 EV Sales

The Tesla logo is seen in this illustration taken July 23, 2025. (Reuters)
The Tesla logo is seen in this illustration taken July 23, 2025. (Reuters)

Growing Chinese auto giant BYD stands poised to officially surpass Tesla as the world's biggest electric vehicle company in annual sales.

The two groups are expected soon to publish their final figures for 2025, and based on sales data so far this year, there is almost no chance the American company led by Elon Musk will retain its leadership position.

At the end of November, Shenzhen-based BYD, which also produces hybrid vehicles, had sold 2.07 million EVs so far in 2025.

Tesla, for its part, had sold 1.22 million by the end of September.

Tesla's September figures included a one-time boost in sales, to nearly half-a-million vehicles in a three-month period, before the expiration of a US tax credit for buyers of electric vehicles -- which ended under legislation backed by President Donald Trump, a climate change skeptic.

But Tesla's sales in the coming quarter are expected to fall to 449,000, according to a FactSet analysis consensus. That would give Tesla about 1.65 million sales for all of 2025, a drop of 7.7 percent and well below the level BYD had attained by end November.

Deutsche Bank, which projects just 405,000 Tesla EV sales during the fourth quarter, sees the company's sales down by around one-third in both North America and Europe, and by one-tenth in China.

- Transition period -

Industry watchers say it will take time for EV demand to reach a level of equilibrium in the United States following the elimination of the $7,500 US tax credit at the end of September 2025.

Even prior to that, Tesla had seen sales struggle in key markets over CEO Musk's political support of Trump and other far-right politicians. Tesla has also faced rising EV competition from BYD and other Chinese companies and from European giants.

"We believe Tesla will see some weakness on deliveries" in the fourth quarter, said Dan Ives of Wedbush Securities.

Sales of 420,000 would be "good enough to show stable demand," with Wall Street "laser focused on the autonomous chapter kicking off in 2026," Ives added, referring to plans for self-driving vehicles.

Even as it has grown quickly, BYD has faced challenges in its home market.

With profitability in China weighed down by price-wary consumers, the company has sought to strengthen its foothold in foreign markets.

BYD is "one of the pioneers to establish overseas production capacity and supply chains for EVs," Jing Yang, Director of Asia-Pacific Corporate Ratings at Fitch Ratings, told AFP.

"Going forward, its geographical diversification is likely to help it to navigate an increasingly complicated global tariff environment," said Yang.

Overseas rivals to BYD have balked at Chinese state subsidies and other state supports that have allowed the company to sell vehicles cheaply.

Trump's predecessor Joe Biden imposed 100 percent tariffs on Chinese EV imports that could potentially go even higher under Trump. Europe has also imposed tariffs on Chinese imports, but BYD is building manufacturing capacity in Hungary.

While the chance of Tesla reclaiming its global leadership in EVs looks uncertain, the American company is also potentially positioned for growth.

Michaeli of TD Cowen sees autonomous technology playing an increasingly important role for Tesla, with breakthroughs in its "full self-driving" or "FSD" offerings potentially boosting sales.

"As Tesla really begins to roll out eyes-off features and expand FSDs capability, if they do that successfully, that should generate more demand for their vehicles," Michaeli said.

Musk has said the Cybercab, an autonomous robotaxi model, will begin production in April 2026. The company has also unveiled lower-priced versions of the Models 3 and Y that could boost sales.


China Says to Launch Digital Currency Action Plan

People walk past a shopping mall in Beijing on December 28, 2025. (AFP)
People walk past a shopping mall in Beijing on December 28, 2025. (AFP)
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China Says to Launch Digital Currency Action Plan

People walk past a shopping mall in Beijing on December 28, 2025. (AFP)
People walk past a shopping mall in Beijing on December 28, 2025. (AFP)

China will on January 1 launch an "action plan" for boosting management and operations of its digital currency, a deputy governor of the country's central bank said Monday.

"The future digital yuan will be a modern digital payment and circulation means issued and circulated within the financial system," People's Bank of China (PBoC) Deputy Governor Lu Lei wrote in Financial News, a media outlet under the central bank.

In the next step towards that goal, a "new generation" arrangement for digital yuan will be launched on January 1, Lu said, encompassing a "measurement framework, management system, operating mechanism and ecosystem".

The "action plan" will see banks pay interest on balances held by clients in digital yuan -- a move to incentivize broader adoption of the currency.

The plan also includes a proposal to establish an international digital yuan operations center in the eastern financial hub of Shanghai, the report said.

Monetary authorities around the world have in recent years been exploring ways to digitalize currencies, propelled by a boom in online payments during the pandemic and the increased popularity of cryptocurrencies such as bitcoin.

The PBoC has been working on a digital currency since 2014 and has been testing the use of a "digital yuan" or "e-CNY" in various pilot programs.

Consumers across the country already widely use mobile and online payments, but the digital yuan could allow the central bank -- rather than the big tech giants -- access to more data and control over payments.


Bulgaria Prepares for the Euro amid Excitement and Skepticism

People shop in a Lidl store, as prices are displayed in both the Bulgarian lev and euro currencies, ahead of Bulgaria's adoption of the euro on January 1, 2026, in Sofia, Bulgaria, December 18, 2025. (Reuters)
People shop in a Lidl store, as prices are displayed in both the Bulgarian lev and euro currencies, ahead of Bulgaria's adoption of the euro on January 1, 2026, in Sofia, Bulgaria, December 18, 2025. (Reuters)
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Bulgaria Prepares for the Euro amid Excitement and Skepticism

People shop in a Lidl store, as prices are displayed in both the Bulgarian lev and euro currencies, ahead of Bulgaria's adoption of the euro on January 1, 2026, in Sofia, Bulgaria, December 18, 2025. (Reuters)
People shop in a Lidl store, as prices are displayed in both the Bulgarian lev and euro currencies, ahead of Bulgaria's adoption of the euro on January 1, 2026, in Sofia, Bulgaria, December 18, 2025. (Reuters)

Bulgarian banks, businesses and shoppers were preparing this week to say goodbye to ​the lev currency ahead of a move to adopt the euro on January 1, a long-awaited milestone met with excitement, skepticism and, in some corners, anger.

Bulgaria, a Black Sea country on the European Union's southeast frontier, will be the 21st country to join the euro currency zone after it met the formal entry criteria this year, including for inflation, budget deficit, long-term borrowing costs and exchange-rate stability.

It comes two years after Croatia joined in January 2023 - the last country to do so - and ‌will push ‌the number of Europeans using the currency to more ‌than ⁠350 ​million. Becoming a ‌member of the euro zone, apart from using euro notes and coins, also means a seat at the European Central Bank's rate-setting Governing Council.

While successive Bulgarian governments have tried to make the step since joining the EU in 2007, the Balkan country of 6.7 million people is split on the issue, polls show, although businesses are largely in favor.

SUSPICIONS AMONG SOME BULGARIANS

Some fear it will push up prices, or are suspicious of ⁠a domestic political establishment in the throes of a crisis that saw the government step down this month ‌amid widespread protests against proposed tax increases.

In a country with ‍historic cultural and political ties to Russia, ‍many are wary of further allegiance to Europe.

“I am against it, first ‍because the lev is our national currency," said Sofia pensioner Emil Ivanov, interviewed while shopping. "Secondly, Europe is heading towards demise, which even the American president (Donald Trump) mentioned in the new national security strategy.

"I may not be alive when this (the EU's demise) happens but that is where everything ​is going."

BUSINESSES HAVE BEEN PREPARING

Some political analysts said the campaign promoting the euro has been weak, and that older people, especially in ⁠remote areas, will struggle to adapt. They said a lack of stable government may further complicate the change.

Still, in the streets and stores of Sofia, businesses have been preparing. Prices of everything from fruit to bottles of wine are displayed in both levs and euros. Government-funded billboards show the euro-lev exchange rate with a message saying: "Common past. Common future. Common currency." Television adverts have also flagged the coming change.

Some have welcomed the move. "Not only older people but also all young people can easily travel using euros instead of having to exchange currency," said Veselina Apostovlova, a pensioner shopping in Sofia.

Businesses that sell goods across borders were also supportive.

Natalia Gadjeva, owner of the Dragomir Estate Winery in the Thracian ‌Valley, told Reuters: "For me, the most important thing is that all operations involving currency conversion and reissuing invoices in euros and then in levs will be eliminated."