Global stocks hit new all time highs overnight, with US stock-index futures, Asian and European stocks all rising overnight after the Senate adopted a fiscal 2018 budget resolution, paving the way for Trump's $1.5 trillion in tax cuts, while news that "dove" Jay Powell may be the next Fed chair added to the risk-on sentiment.
Authored by Robert Gore via Straight Line Logic blog,
It will be a crash like we’ve never seen before.
SLL has been accused of trafficking in “doom porn.” Guilty as charged. If you don’t like doom porn, don’t read this article, it’s hard core. If you prefer feel good and heartwarming, there are plenty of Wall Street research reports and mainstream media stories about the economy available. Enjoy!
The contemporary low volatility trading environment has been kind to actively managed equity funds - particularly if they piled into large-cap momentum stocks like Facebook and Amazon, which have been responsible for the bulk of this year’s rally.
Via LPLResearch.com,
There have only been eight moves of at least 1% for the S&P 500 Index so far this year - the least since 13 in 1995. The all-time record was an incredible three in 1963.
What about a big move? The last time the S&P 500 moved at least 4% was nearly six years ago.
As last week ended, VIX was crushed back near record lows to ensure the S&P 500 closed above 2500 and to prove all is well in the world - despite quakes, storms, floods, nukes, and worst of all... Fed balance sheet unwind plans.
And VIX speculators have never been more short (implicitly levered long stocks)...
So why, given all this exuberance and complacency, is uncertainty around VIX's future trajectory at relative record highs?