VIX volatility is wicked low

More fumblygook, new word, out of the Fed where there is a little he said/she said over the direction of the taper.  As I write this, the House of Representatives passed a spending bill without funding for the new health law which should shake things up a bit in the Senate.  All of this has some consequences for volatility.

Look at the IV30 for VIX this morning.  It is pretty much trading at a year low.  Look at the volatility spikes during the last two budget debates.  I think  IV is going higher and the volatility futures think so too.

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Will this upside skew ever die?

It is kind of a quiet day as we wind toward the close and my thoughts are wandering to what will happen next.  The Fed is pumping again so my question is do we go higher or lower?  The stock market is not giving back too much today.  The only  thing really getting slammed is the front term IV in the indexes, especially at the money.

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The Fed pulls a fast one


With 30 minutes until the end of the trading day we are looking at a very confident market.  I commented in the blog yesterday that there was substantial confidence going into the FOMC today.  Of course I underestimated the confidence.  All those folks sitting in cash are swearing at their statements today.

The Fed is worried we are not growing fast enough and wants to keep the little economy that could chugging along.  My stocks are not complaining.  From the Fed’s point of view if you love buying T-bills at 1.7% you really have to love them at 3%.

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MSFT to spend billions and billion of dollars!

A client of ours sent me a stat that said, “Only 2 down days in last 14 for SPX leading into the official end of q/e........un-freakin -real!”  I have to share that sentiment.  While I have not been betting the market is going to go down I been thinking it would not go up this fast.

 I gave up a long time ago trying to figure out why the market does what it does but at this point my guess is ….relief.  The equity market is possibly quite happy that the Fed will start to exit.  I guess we will see tomorrow.  Either way it is a big rally on lots of unknowns.

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Singing the Larry Summers blues

Late in the day the broad market is up about .5% with the NASDAQ doing diddly since AAPL is in the toilet.  While there was some positive news out on the Syria front it is hard to believe it was enough to drive equity prices to near record highs.  I guess we can call it the Larry Summers Effect.

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Does the Sep VIX vol tell us anything?

The market is continuing its rally this week into the FOMC meeting on Wednesday.  What I find odd is there is no solution in Syria, no confirmation on QE and Congress is about to get into Cage Match III with the POTUS on the next round of budget talks.  And we continue to rally.  That is confidence.

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Bond Volatility Awakening

For the last two years, the FED has been willing to sell just about any downside put in the 10 and 30 year it could. During this don't fight the Fed trade, volatility in bond options plummeted, as did volatility in the instruments themselves.  Now that the Fed appears to be ready to ease off its put selling, bond volatility is likely to begin rallying and will likely normalize.

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Penney for your thoughts

There is a small sigh of relief in the ongoing Syria Crisis.  Who would have thought that Mr. Putin steps in to be the humanitarian in all this?  Starting the clock two weeks ago almost nothing has been to script.  While the wags will parse the latest out of the State Dept. I want to look at something where the IV was actually up today instead of down.


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AAPL, We Just Aren't That Into You Anymore

As we head into another major AAPL event, likely the release of the I-Phone 5s and possibly a low and high end phone I thought I would take a look at what AAPL implied volatility is doing into the event.  On one hand, IV has rallied into this event.  On the other hand take a look at what IV used to do into earnings and major AAPL events.


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