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The Three Types of Risk-Off, Sonic AI
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The Three Types of Risk-Off
Alpha Exchange
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Jul 2, 2026
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23:37
Interview
The Three Types of Risk-Off
From
The Alpha Exchange
Dean Kernutt
(host)
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Executive Summary
The speaker introduces a framework for classifying market 'risk-off' events into three types based on the stock-bond correlation: Classic (stocks down, bonds up), Taper (bonds down, stocks down), and Liquidation (starts classic, then both fall).
Historical events like the 2008 GFC (Classic), 2013 Taper Tantrum (Taper), and March 2020 crash (Liquidation) are analyzed to illustrate how monetary policy and market structure influence these regimes.
The 2022 joint sell-off in stocks and bonds is highlighted as a major 'Taper' event that broke the long-standing negative correlation, exposing the vulnerability of 60/40 and risk parity portfolios.
A potential fourth type of risk-off is proposed: a U.S.
Treasury crisis, where a loss of confidence in government debt itself becomes the primary systemic risk, a tail event the speaker believes is underpriced.
Continue your research
Keep pulling the thread on Federal Reserve.
A Framework for Risk-Off Events
The Evolving Stock-Bond Correlation
12
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Processed Jul 2, 2026
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