Thursday, May 11, 2017
Ermagerd! The S&P is down 0.63% this morning! $VIX popped to 10! Let's check Zerohedge to find a reason to sell!:
Ritholtz - yeah, $VIX is actually bullshit. He thinks Josh Brown has a good explanation for low $VIX: simply, nobody's that interested in buying downside puts anymore. Then again, they were just last fall, and with the subsequent Trump market pop most likely overdone they'll be likely to buy downside puts again in the near future. Since $VIX is ideally an index of the cost of a downside put, this is a good experimental setup right here.
So if Josh is right, $VIX should go back to its normal 12-14 range and XIV should lose a bunch of money for a while, the way XIV was a money-loser for about a year through 2015-2016, if I remember correctly. Which will be nice, cos then the XIV longs get punished for being suicidal idiots while the rest of us just sit thru a 10% drawdown in US equities. We need that.
Bloomberg - Ermagerd! Cherna Derlerverergerng cerntergern! Apparently, China is deleveraging, and that carries risk of contagion or something. Just like it did for the past 10 years, in fact. Me, I see a slight drawdown in ASHR and no move in FXI, so I'm wondering why everyone's suddenly piddling their frilly little pink girl-panties.