Ever feel like you're living through the first 45 minutes of a disaster film? You know the drill - smug and unrealistically prosperous community is faced with unprecedented events, greets with curious shrugs, more unprecedented events, news coverage containing ominous plot foreshadowing which is universally ignored, more weirdness, mounting sense of anxiety, more unprecedented events, frantic news coverage - followed in the second half by panic in the streets and the end of civilization as we know it. Well, in case you haven't seen it before, this is the VIX, the Chicago Board Options Exchange Volatility Index, an oft-cited indication of market volatility (using the S&P 500 as a proxy) over the coming month. Last week there were sharp intakes of breath (including yours truly) when it closed at 47 on Wednesday and finished the week at 45. As you can see, it closed today at 52, having surged towards 60 during the trading session. A weekly close of 45 is in itself unprecedented, based on the data I can find on Bloomberg, as is a daily close above 50 - and that includes such spectacular nightmares as the Asian crisis of 1997, the Russian crisis of 1998, 9/11, and the worst parts of the 2002 gloom. So, if you awake tomorrow to find
zombies in your garden, a giant spaceship
over your house, or a
lot of ice, it's because the second part of the film is about to start. Goodnight and good luck. Maybe catch you
on the beach next summer?
1 comment:
Any good disaster movie has the wee man that sees what is coming down line is not the light at the end of the tunnel but another train.
I'd be interested on your thoughts on who the Roy Schieder (think Jaws!) is going to be.
From the wreckage left by Angela Merkel, Ireland, Fortis, Hypo, Iceland etc. it would appear that Europe is in no position to lead a dog let alone global financial markets and those in the US appear to be merely sticking $700bn plasters on gushing arterial bleeds. Maybe the emergent Chinese/Indians should start stepping up to the plate?
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