If you’re feeling as if the stock market is behaving like a tsunami these days, you’re right.
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The Cboe’s VIX index, a key measure of future stock market volatility – also known as the so-called fear gauge – has seen its 38th move of at least 5% this year, the most on record, as tracked by our partners at the WSJ Market Data Group. The moves – up and down – are balanced at 19 times each.
The VIX is currently hovering around the 20 level. A year ago, during the same period, it was sitting at half that. For some perspective, we are still a long way from panic mode. The VIX traded as high as 80 during the financial crisis in 2008.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| VIX | n.a. | n.a. | n.a. | n.a. |
Despite a global economy on the upswing and a U.S. stock market that hit multiple records during President Donald Trump’s first year in office, 2018 has made investors more prone to knee-jerk reactions as trade wars and the threat of real military conflicts dominate the headlines.
The Dow was dented on Wednesday after Trump tweeted a direct warning to Russia over threatening to retaliate against any missiles fired at Syria, though it eventually pared losses.
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The day before, the Dow surged intra-day more than 500 points, to close 429 points higher, after Chinese President Xi Jinping vowed to cut auto tariffs, a move that wowed U.S. investors as the two countries continue to trade tit-for-tat trade barbs.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| DIA | SPDR DOW JONES INDUS AVG ETF TR SER’1′ UNITS OF BEN INT NPV | 242.57 | -1.44 | -0.59% |
| SPY | SPDR S&P 500 ETF | 264.51 | -0.64 | -0.24% |
| QQQ | POWERSHARES QQQ NASDAQ 100 | 161.01 | -0.20 | -0.12% |
While volatility gives Main Street investors angst, it is gold for exchanges. The team at Jeffries is bullish on the CME and the Intercontinental Exchange, parent of the New York Stock Exchange, citing volatility. CME Chair and CEO Terry Duffy gave FOX Business some insight on how the threat of a trade war is hitting the agriculture market as America’s farming community tries to hedge potential tariffs.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| CME | CME GROUP INC | 161.69 | -1.90 | -1.16% |
| ICE | INTERCONTINENTAL EXCHANGE INC. | 71.72 | -0.76 | -1.04% |
“The smallest sector of the CME – our agriculture sector – traded three million contracts, a record level of participants back in the marketplace. People are concerned about this asset class, as they should be,” he told “Cavuto: Coast-to-Coast” on Tuesday.
CME CEO on Volatility and Trade Wars
Raging volatility may soon take a breather as “investors will soon shift their focus to 1Q earnings season” according to the team at Goldman Sachs. Optimism is high for corporate earnings with profits expected to grow 17% and sales 10%, the firm noted. Additionally, the team at Wells Fargo’s ‘Chart of the Week’ shows that a high bar is set for 1Q earnings growth.
Citigroup, JPMorgan and Wells Fargo will report results on Friday, April 13th, and volatility could have a positive impact on the trading units.
JPMorgan CEO Jamie Dimon, in his annual letter to shareholders earlier this month, said: “Volatility and rapidly moving markets should surprise no one.”
