In today’s Morning Newsletter, Hedgeye Director of Research Daryl Jones questioned the lack of current market fear writing:
"…The area of foreign policy may be one key area in which the amount of concern or fear is lower than reality warrants. From the Taliban in Pakistan, to the potential for an Iranian nuclear arsenal, to the ongoing conflict in the Ukraine, foreign policy risks remain. Certainly these global hot spots create buying opportunities more often than global calamity, but at a VIX of sub 12, not a lot of calamity is priced in.”
But we wanted to know what you thought, so today’s poll question was: Is the VIX heading higher or lower?
At the time of this post, 76% said HIGHER; 24% said LOWER.
Of those who voted HIGHER, they explained:
- "I voted higher because, darn it, it can't really drift much lower, can it? Hey, everything is calm and serene...until it's not. It works until it doesn't, then a little panic sets in. One thing is certain: nothing is certain as long as the Fed keeps micro-managing my checking account."
- "Currently, VIX is unusually low, so the expectation is steady, if not healthy robust growth. The VIX will jump much higher when this rosy expectation isn't being realized."
- "The risk reward on the VIX is definitely up. So higher."
- "DJ said it best. The market is not expecting the unexpected. When unexpected things happen, reactions in financial markets turn flat-out violent."
However, this voter, who said it was heading LOWER, pointed out: "Like shorting the SPX, the VIX has been the pain trade of 2014. Of course a geopolitical event could send the VIX to 20 in a millisecond, but what type of event? Until such event happens, I believe the VIX will stay within KM's risk range of 11.## to 14."