Authored by Sara Potter via FactSet,
Last week, I detailed the various factors leading up to the stock market crash of October 19, 1987. As we approach the 30-year anniversary of Black Monday, are there signs that the bull market of 2017 could end in the same way? Let’s compare the financial, economic, and political factors now and then to paint a better picture.
While intra-month the CBOE Volatility Index reached its highest since November, before plunging back to earth into the end of the month, VIX is still on track to post its lowest annual average on record.
Bloomberg notes that in the past decade, VIX gains in August were followed by September declines in all but one instance.
While VIX has collapsed so far this year, it may not last.
No fundamental catalyst for today's tech wreck (just as there wasn't last time), but many people noted the coincdental timing of JPM's Kolanovic note on Vol fragilities coincided with the start of the pain...
Liquidity collapsed leaving many to think...
It shouldn't be too surprising that the XIV exchange-traded note - which is designed to deliver the inverse performance of the well-known CBOE Volatility Index (or the VIX) on a daily basis - is attracting fresh attention after surging as much as 87 percent this year.
http://player.cnbc.com/p/gZWlPC/cnbc_global
But, as CNBC notes, some caution that investing in the exchange-traded product now could be deeply risky.
After several months of low volatility across assets since mid-2016, particularly in equities, markets were more volatile last week owing to fears of central bank tightening. Volatility picked up first in FX and rates, and then spilled over to equities. However, as Goldman notes, this might not be the end of the low vol regime yet.
Via Goldman Sachs,