Steven Merrell, Financial Planning: A little perspective on market volatility
Feb 12, 2018, 00:28
"Equity markets have finally woken-up after a period of low volatility and complacency that had led to rapid gains", said James Knightley, chief global economist at ING.
The epicenter of the selloff was in the highly leveraged world of exchange-traded funds and related products, where investors had successfully bet for years on market volatility remaining extraordinarily low for long periods.
The Vix index should reflect this in the coming days.
Monday's slump in the US stock market may have been painful for those betting against volatility in prices, but traders who took opposite positions hoping to gain from a sharp move are likely to laugh all the way to their banks. One of the big money-making trades on Wall Street since 2015 has been to sell volatility.
Barclays also told clients that the spike in the VIX index - the S&P 500's fear gauge - was "technical in nature and does not necessarily indicate a true increase in risk perception". The markets were placid and traders were sanguine.
BIGGEST TWO-DAY SPIKES IN THE VIX A historical look at the VIX suggests that spikes such as the ones witnessed on Monday are rare. The S&P last corrected in January 2016.
Last Friday, the stock market suffered its largest daily drop in more than two years and volatility surged. At one point on Monday, the Dow Jones Industrial Average dropped more than 6 percent inside of 6 minutes. But during the market rout on Monday, it soared to 38.8, its highest level since August 2015, and rose by a record amount.
Davide Silvestrini, EMEA Head of global quantitative and derivatives strategy at JP Morgan, said the sharp losses experienced by short vol strategies will likely lead to reduced volatility selling flows from institutional investors. Once volatility started rising, these funds were forced to cover their short volatility positions. The resulting activity put tremendous pressure on stocks which further exacerbated volatility and kicked off a self-reinforcing spiral. As the following chart shows, the drop that followed across the globe wiped out $4 trillion in world stock market capitalization, and world stocks have reversed their 2018 gains. They bring discipline and help keep Wall Street hubris in check. Do all you can to understand what is happening as corrections unfold.
Steven C. Merrell is an investment adviser and partner at Monterey Private Wealth, Inc., in Monterey.
The Reds face FC Porto in the Champions League next week and they will need their record signing if they want to progress. Southampton: McCarthy, Cédric, Stephens, Hoedt, Carrillo, Tadić, Romeu, Ward-Prowse, Lemina, Bertrand (c), Højbjerg.
Without being specific, the aide reportedly said he expected his ex-wives to say unflattering things about him to investigators. Spokesman Raj Shah says Trump was not aware of the allegations against former staff secretary Rob Porter until Tuesday.
Tuitt is coming off of a season in which he played in 12 games and finished with 25 tackles, three sacks and a forced fumble. Ball said he wants to play in the Rising Stars Challenge but isn't sure how his knee will feel by the February 16 event.
And this is just the warm-up for some fundamental changes to Disney's ticketing programs yet to come later this year. Beginning on Sunday, Magic Kingdom "value" days will cost $109 for an adult and $103 for children.
Broader markets, however depicted a mixed trend as the mid-cap index fell 0.09 per cent, while small-cap up 0.23 per cent. Investors had been selling riskier assets for the safer greenback amid stock market turmoil.
Agreement was reached following a meeting between delegations from the two Koreas and Olympic officials in Lausanne, Switzerland. The 2018 Olympic Games opening ceremony is just a day away and Team USA is sharing their passion for the epic traditions.
Instead, collegiate athletes and professionals from leagues in other countries will makeup the worldwide hockey teams. Each country has great IIHF jerseys that it wears during the World Championships and World Junior Championships.
Gerrymandering critics are hoping the court will rule that voting maps can be so partisan they violate the Constitution. "... In anticipation of Friday's deadline, lawmakers have begun the preliminary procedures that could pave the way for a new map.
Trump's plan, but said the country needs a plan that "brings revenue back to the treasury, creates jobs and reduces the deficit". The old record was the 5 hour and 15 minute speech given by then-Rep. "The beauty is in the mix", she told her House colleagues.
This also brings HDR10 support, deinterlacing, and chroma upscaling using Direct3D 11 in the Windows 10 Fall Creators Update. Make sure to check the VLC page to find out all the new features that have been added to version 3 .0.
Their much needed three points gives Watford some breathing space over the bottom three. "We've done a job in trying to make sure we're harder to play against", he said.
Pakistani rights activist Asma Jahangir dies
In Pakistan , she was awarded the Hilal-i-Imtiaz and the Sitara-i-Imtiaz, the second and third highest civilian honours. Jehangir is survived by her businessman husband, Tahir Jehangir, a son and two daughters.
Cubs, Darvish agree to 6-year deal
Chicago has agreed to a six-year deal with right-hander Yu Darvish , The Athletic's Ken Rosenthal reported Saturday afternoon. Darvish finished last season with the Dodgers, helping them knock out the Cubs in the playoffs to reach the World Series.
NASA Probe Captures Farthest Images Taken Away From Earth
About two hours later, New Horizons later broke the record again with images of Kuiper Belt objects 2012 HZ84 and 2012 HE85. New Horizons is not as far from Earth as Voyager 1 , but this spacecraft is also on track to leave the solar system.
Much of Congress is not on board with Trump's parade
But White House legislative director Marc Short shot back on MSNBC: "I'm not sure honoring the military is a waste of money". The cost of the march has yet to be calculated, but would likely run into the tens of millions.