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Michael Green explores market-maker strategies during periods of market stress. He draws a parallel between ETF creation and redemption processes and how market-makers navigate these scenarios. Green emphasizes that while they do not short shares that 'do not exist,' the ability to buy BRK/A and lend out BRK/B facilitates their operations. However, he highlights that market stress can disrupt perfect arbitrage opportunities.
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Green's perspective on market-maker adaptability underpins broader questions around structural factors in financial stability, reflecting his previous examination of how the foundation of monetary policy depends on the Euler coefficient. His scrutiny also extends to the interpretation of economic data, as seen in his critique of using the CPI as a measure of baseline participation, urging a more nuanced understanding of market dynamics during periods of volatility.