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Like Cookie Monster with Chips Ahoy, Investors Gobble up Risk; VIX collapse since December one of quickest ever

Apr 23, 2019

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

  • It was not so long ago that fear reigned, Christmas Eve to be exact, the VIX was at 36, economic unceratainty pervailed, and investors wondered if it was just about to really be The Year Without a Santa Claus
  • Economic and labor data in the mid- to late-fourth quarter was weak and consensus was building towards an expected slowdown
  • Once the new year began, happy that Santa did in fact come, investors started to get better news and sentiment improved slowly
  • A Fed that was expected to hike multiples times then became one less inclined to hike
  • Data on the economy began to perk up as the new year progressed, investors took notice and their risk appetite perked up as well
  • Trade news improved with both US and China agreeing progress was being made and a final deal is within reach

VIX Volatilty Index, 6 months

 

vix 6 moths

  • The rumble from the risk-appetite non investors became an insatiable roar, and they gobbled up risk with increasing intensity
  • In one of the quickest collapses in the VIX ever recorded, the VIX went from 36 on Decemeber 26th to around 12 presently as investors became more and more confident 
  • Risk levels globally saw the same movement, albeit with a less pronounced move in many places
  • Fed-speak became more and more dovish, further fueling risk-appetite
  • Data improved, starting to show more strength than expected, genearlly speaking
  • The Fed is now expected to cut as its next move, some time in the future and the VIX is flirting with single digits
  • What a differnce 5 months makes, Cookie Monster would be proud

 

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