For several centuries, it was common knowledge that all swans were white. Then a black one was found in Australia; more recently, the term has become a brokerage-household name wondering what other unknowns lurk. Is it possible a different risk is now present if Black Swans have become over-exposed?

There are now about 13 million Google (GOOG) matches for Black Swan and around 1 million for White Swan (remember the ones we previously only knew to search for). Has the overwhelming favorite of what you'll actually see next been priced with steep underdog odds in stocks like swans?

I guess if there were one chart to mark this time that stands out most from our book of hundreds we draw each month (or else we’d never believe most of this stuff actually happened), it would be this one, which I shared with my firm's partners in March 2009.


You're  looking at the prices on 2 different credit default swaps -- pricing the odds at Wall Street betting parlors on whose debt was most likely to default: Mexico or Berkshire Hathaway (BRK-A). I am not sure how many Black Swans are in Omaha, but as you can see here, odds and risk were so out of whack recently that Berkshire was laying the points to Mexico in a contest of who was most likely to go belly-up.

So what’s the trade? I'll share one of my firm’s answers to that question, but first some much-needed context for a market that feels divorced from anybody with a lens wider than a day or week. Every movement is now described as soaring, flying, plunging or collapsing isn’t it? The most recent breathless launch of Treasury yields offer many reported examples.


That's the 2009 move on the 30-year Treasury yield. Making the leap from this unchartered flight (I’m getting the hang of this swan hyperbole), are a lot of fears that this is another reason for stocks to revisit lows because it’s the last thing a fragile consumer can handle.