One of the unusual things about the current market is the extremely low level of the VIX. The VIX tends to oscillate between 12 and 20, but recently the VIX has been buried in the 11 area. This implies an extreme complacency and a decided shortage of puts. In other words, investors are not thinking in terms of insurance in case the market takes a dive.
My guess is that investors feel safe and comfortable in that they believe the Fed stands ready to halt any stock market decline with more QE.
The big question of the day is whether the Fed will stick to its schedule of exiting QE by October. A further question is -- who will buy the new issues of Treasuries if the Fed halts its buying? The stock market does not appear to be worried about the situation, and I must confess that I don't know the answer ... Log in or subscribe to continue reading.
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