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Category: Markets

Adaptation

In October 2015, Crude Oil was in the midst of an epic crash, down more than 50% from its high in 2014. At $49, credit concerns were front and center, as spreads on Energy High Yield bonds exceeded 1000 basis points. The pundit talking points at the time were as follows: With Crude Oil under […]

Volatility Spiked. Now What?

Well, that didn’t take long. 1) Is Shorting Volatility a Free Lunch? 2) What Happens When Volatility Rises? These were the titles of my last two posts. And today both questions were answered in extreme fashion. The Volatility Index (VIX) rose 46%, the 7th largest 1-day spike in history. The S&P 500 declined 1.8%, its […]

May you live in uninteresting times. Market volatility has become a thing of the past. To wit, the S&P 500 (over the past 15 trading days) is trading in its narrowest range in history. The VIX, the so-called “Fear Index,” is lower than 99% of historical readings. What are investors afraid of these days? You […]

Thinking about shorting volatility? You’re not alone. Short interest in the long volatility ETN (VXX) has exploded higher in recent months. Source: RBC, Zerohedge Why does everyone want to short vol? 1) Shorting volatility (ex: shorting the long volatility ETN VXX) has been enormously profitable since 2009… 2) This week the Volatility Index (VIX) hit its […]

“Emerging markets are getting crushed: The oil crash raises the risk of a full-blown crisis in the emerging market world.” – CNN Money, February 2016 It’s a tale as old as time. Emerging Markets stocks “need” higher oil prices. Oil is said to be their lifeblood; without it they are doomed to a state of […]