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Is the VIX Decline Scaring Investors?

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  • Description

    Sandra Smith on the outlook for the Volatility Index.

  • Duration 2:44
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-- the next the volatility index hitting a new low today let's go to -- met with her trade Sandra.

Yes -- pretty is that you know basically scared of the fact that nobody scared in the stock market just keeps going up.

And we use that that scare thing -- didn't.

Can be measured by the -- let's put it that way the CBO leave that market volatility and -- that we often called the fear -- eleven.

And a half points right now -- down 3% on the session.

If you look out -- that over the past year is down 22% and sitting at its lowest lover -- Over the past year make that an even bigger chart go to the five year chart you're looking at -- volatility index at its lowest level -- all going back.

Prior to the -- -- of the recession in prior to those 2009 lows.

For the stock market which has a lot of folks asking we'll we're -- these low levels everybody so complacent maybe this is the calm before the storm.

In an indicator that the stock market is eventually gonna sell off here well not so much the case Michael Gavin over Barclays actually put out a note on this and you're looking at the Dow -- The market volatility in next basically showing how -- -- can move in opposite directions and often do the Michael Gavin over -- Barclays is basically saying that.

While low volatility has been associated with the calm before the storm and it has been a contrary an indicator.

For the stock market the past is that game is all changed now since Central Bank -- event invention has become the norm essentially Cheryl.

I Gavin is -- out over at Barclays that.

It's not the same environment that we're looking at the -- he says this could be a new low norm.

For the volatility index based on the fact that the Central Bank the Federal Reserve steps in and props up our markets by buying back bonds and printing money.

So a really interesting take on that considering a lot of us has been asking that question allows it to our -- see a turnaround in the stock market where -- so low bank he says not the case.

US -- -- -- because you know we're talking earlier figure in the noon -- markets now about the dollar to about that strengthening dollar spent unless it is vs other currencies the Euro sterling.

The yen.

That tells me that the Fed is gonna have to rethink some things because wants inflation starts to kick again I don't care what they say.

Now and next year we're -- -- inflation I think this year we might see inflation that change the game doesn't think correctly players yeah game has changed because remember used to get a weak dollar and then you'd see the Dow Jones Industrial Average go higher because of international companies to ride.

Overseas when our greenback is weak growth not the case that dollar's been going up it's up 4% this year the Dow's -- going up.

So it's just one of those environments -- have to throw all of those old indicators Tinto wouldn't -- Up up up up but we have you got -- all right Dennis Smith the trade Sandra thank you very much up.

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