Pragmatic Capitalism

Practical Views on Money & Finance

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Volatility is all About Liquidity

The S&P 500 tried to pull back yesterday, but as usual the late day trading pushed the loss to just 65 bps. This has become the normal market. In 2012, volatility puttered at 12.77%. In 2013 it fizzled down to 11.07%. YTD we have crept up to 11.73%. These metrics tell you to expect daily gains and losses to be +/- .75%. Very Exciting.

Long-term Complacency

If you have been watching market news over the last few months, there have been plenty of articles talking about how low the VIX has gotten and how we are back to levels not seen since 2007 or earlier. What they do not talk about is how the VIX is extremely short sighted.

Anyone See a Correlation?

I have been told that China is slowing down. I have been told that with the US Fed tapering, some money is being drained out of the Emerging Markets and going to the United States. I have been told that the Emerging Markets will have reduced competitiveness that will benefit the United States.