While VIX closed at its lowest level since 1993 on Friday, VVIX (which tracks the anticipated volatitilty of VIX) completed a fourth week of gains in five, reaching a record high relative to the measure of equity turbulence.
As Bloomberg notes, with the VIX down more than 30% this year through the end of last week, investors have been using options to bet on volatility.
Having told its employees "don't panic" over the weekend (at the crashing stock and bond prices of Spain's 6th largest bank), it appears investors are ignoring that message as Banco Popular's credit curve has inverted for the first time since 2012 in the biggest red flag yet that Spain's banking crisis is systemic and about to test the EU's bail-in laws.
Banco Popular Chairman Emilio Saracho sent a letter to staff assuring them the bank remains solvent after Friday's stock crash, courtesy of Expansion, google translated:
Remember when buoyed by the ever present specter of QE, stocks would levitate no matter what happened, because "good news was good, but bad news was better"? Well, according to BofA, we are right back where we started.
From BofA:
On Friday, Pimco's Mohamed El-Erian referenced one of our recent charts showing the dramatic divergence between Treasury yields and stocks, which he said "this (simple yet powerful) chart from @zerohedge warrants a PhD thesis in Finance."
This (simple yet powerful) chart from @zerohedge warrants a PhD thesis in #Finance #stocks #bonds #markets pic.twitter.com/w61rDBFkPT
— Mohamed A. El-Erian (@elerianm) June 2, 2017
Authored by John Rubino via DollarCollapse.com,
It’s just common sense: Borrow too much money and the weight of this debt makes it hard to do things that used to be easy. This truism is now (finally!) hitting home, and blame is being apportioned. A couple of recent examples:
Over The Last 10 Years The U.S. Economy Has Grown At EXACTLY The Same Rate As It Did During The 1930s