This Is Not What A Low-Volatility Environment Looks Like

Tyler Durden's picture

VIX, the market's measure of forward-looking expectations of equity volatility has been hovering at decade lows (and even after yesterday's spike has plunged back once again today). MOVE, the bond market's measure of forward-looking uncertainty is at all-time record lows. As one infamous rates trader said recently, maybe it's early Alzheimers, but we are fairly certain that that last time Implied Volatility was scraping the lows, we did not experience:

  1. Gold moving almost $250 or over 15% in less than 48 hours;
  2. A G-3 currency moving over 25% in less than six months;
  3. A G-3 bond yield moving by 35% in two months;
  4. The Dow leaping by almost 20% in five months;
  5. A joint monetary policy as impactful as Volker or the Paris accords.

We can't help but agree.

To be clear, this is neither good nor bad, bullish nor bearish, reasonable nor irrational; but by any means this is not how an all-time-low volatility environment is supposed to look.

All is well...

VIX - equity market volatility expectations near all-time lows...


MOVE - bond market volatility expectations at all-time lows...



Gold moving almost $250 or over 15% in less than 48 hours;


A G-3 currency moving over 25% in less than six months;


A G-3 bond yield moving (up and down) by 25-35% in two months;


The Dow leaping by almost 20% in five months;


A joint monetary policy as impactful as Volker or the Paris accords.


As the 'infamous rates trader' sucinctly summarized:

In a nutshell, in a deeply intertwined world, I simply cannot buy into the notion that Japan can engage in a massively disruptive Monetary Policy without a ripple washing ashore in the US.  Japan cannot absorb 100 Trillion Yen domestically, it must leak out to its trading partners.


This is not a Helicopter drop of money, it is Star Wars about to engage its disruptor on the currency.


While this policy may be long overdue, the ultimate ramifications are completely unclear to me.

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Divided States of America's picture

Wow, the stock market shrugs off everything now even as the people now cant go for a marathon without getting their limbs blown long as the Dow is up, everything is A OK!

Bearwagon's picture

What's this "market"? Can it be downloaded somewhere?


AldousHuxley's picture

liquidity works both ways


people are learnings that capitalism's increased volatility is only good for those who are immune from it...

TBTF execs, government workers, government subsidized industries like lockheed martin, doctors, cops, home and landed gentry.


you  might be getting more money, but you are also increasing all aspects of risk. less job security, less stable currency, less stable systems, ...basically can't plan for shit anymore and live like some hunters and gatherers in urban jungle.

ZerOhead's picture

I have a bad feeling that we are going to see a lot of hunting and gathering in the urban jungle of the not too distant future...

Say What Again's picture

14:10 EST  

Its that time of day again...

Margin Calls are starting to kick in.

ConfederateH's picture

liquidity is a double ended dildo...

butchee's picture

No worries, Simon Potter's got your six.  BTFD!

Panafrican Funktron Robot's picture

Ergo, VXX puts are the trade.  Just because it's hilariously low, doesn't mean it won't go even lower.    


Dr. Engali's picture

You head towards the internet then you hang a right.

Cacete de Ouro's picture

Paul Jeanty came to see me this afternoon to report on a convetsation that he had the other day with Leutwiler in Zurich.

Leutwiler told him that the Americans had come to see him in Belgrade (the whole team of them, Miller, Solomon, Volcker and Wallich). To Fritz's great surprise they had asked him whether he might organise a gold selling operation (it was mainly Volcker anf solomon who did the talking).

October 1979

Belgrade being the IMF annual meeting....

Gringo Viejo's picture

@ divided states I found it amusing Chris Matthews wasted no time hinting the bombings were linked to "far right elements."
What Matthews as a communist doesn't realize is that under no circumstance would Patriots harm their fellow CITIZENS while a communist would kill as many "bitter clingers" as necessary to advance their agenda.

Gringo Viejo's picture

Most of us at ZH have seen this coming and have been preparing accordingly for years. I'm okay with it.

ZerOhead's picture

I was an early advocate (aka nutjob) for preparation.

That said... when you take the time to think about it deeply... and begin to fully understand the complexity of implications that we will all eventually be facing... well... there is just no way to be OK with it.

Most people are going to get hurt very badly as the only way of life they have ever known ceases to exist in any recognizable form.

McMolotov's picture

Now witness the firepower of this fully armed and operational currency debasement.

LawsofPhysics's picture

Proceed with the exponential destruction of commodity paper.  There will be no further limits to the future success of


Bearwagon's picture

Not to disagree with you, but if the good man could have known, he'd probably have changed his name. ;-)

ParkAveFlasher's picture

VADER: Don't be too proud of this technological terror you've
constructed. The ability to FIX ALL PRICES is insignificant next to
the power of the GOLD, BITCHEZ.

MOTTI: Don't try to frighten us with your TRADE BALANCING ways, Lord Vader.
Your sad devotion to that BARBARIC RELIC has not helped you conjure
up the SOLUTION TO THE MASSIVE SHORT POSITION, or given you clairvoyance enough to find the
Rebel's hidden GOLD...

Suddenly Motti chokes and starts to turn blue under Vader's

VADER: I find your lack of PHYSICAL PRECIOUS METAL disturbing.


LawsofPhysics's picture

Beat me to it.  Glad to see people can think alike.  When fraud is the status quo, possession is the law.  Got physical?  The only edit I have is;

VADER: "I find your lack of faith in precious metals disturbing."

slaughterer's picture

Japan: Godzilla (world markets) stands ready to eat you up.  

TeamDepends's picture

History shows again and again how nature points out the folly of man


Yen Cross's picture

     'Jumping The Rubicon' couldn't hold a candle to these manipulated markets. Something is going to break. A rubberband can only be wound so tight before it snaps.

css1971's picture

I've been wondering about this too. We're all seeing real volatility all over the place, it looks to me like the amplitude is getting bigger too. FTSE is maing 200 point moves as well. It reeks of desperation.

Boeing Boy's picture

bad day for USD index today, sign of things to come?

slaughterer's picture

So WHEN does the SHTF Tyler.  We suffering index shorts have been waiting for a prophetic message from our Fight Club leader.  Since the dislocation in Japan only sunk the PM complex, do we need to wait for AAPL earnings to see how broke the US consumer is and see SPY sink finally?    

Bearwagon's picture

You'll never know for sure before it has already happened, Tyler or not ...

Turin Turambar's picture

Duh, VIX is manipulated.  I know.  Shocking isn't it?  LOL

Clowns on Acid's picture

The VIX is just another tool used by the Fed and TBTF banks. One just buys stocks and in wayyy overbought conditions, can hedge via the VIX at a very low cost. The Fed has it all planned out...whack a mole....

Crush PMs, print fiat, buy bonds, and keep the VIX hedge very cheap so that all can just buy and hold with abandon.

Soft (food) commodities are the only markets that one can hedge the actual inflation in the economy. But of course all CNBS shouts about is how much more corn and wheat is being planted this year.

LawsofPhysics's picture

"CNBS shouts about is how much more corn and wheat is being planted this year." -

Indeed.  Planting is the easy part.

ZerOhead's picture

Speaking as an experienced former farmer... planting is usually easiest when the fields are moderately dry (unlesss your soil dries to the consistancy of cured concrete and breaks off your drills...)

And as luck would have it the fields are exceptionally dry this year...

Some might even call it drought.

morning's picture

I swear to all pantheons that I will dance, sing, holler and shoot 5% of my ammo when the fucking EUR plunges like a dead venezuelan dictator.

TheEmperor's picture

Young fool, only now, at the end do you understand.

Commander, you may fire when ready.

Mongo's picture

Zero Hedge still not taken down by authorities... good for us bad for US Ponzi Economy

U4 eee aaa's picture

it is easier to fire upon us if we're all in the same pen. If they take down ZH we'd all scatter. It would take too many resources to hunt and track us all down.

Besides, the Feds actually learn something when they show up here

resurger's picture

Beatings will continues untill the bitchez morale improves

SheepDog-One's picture

Fractional reserve bums can't find a way to get interest anymore, so they'll kill the planet now. That's all.

Dr. Engali's picture

Star wars does not have disruptors, they have blasters. It's the Romulans on Star Trek that have disruptors.....Don't fuck with  the sci-fi man.

Bearwagon's picture

So you know "Perry Rhodan"?!

ParkAveFlasher's picture

Yeah that one had me head-scratching too ... like maybe I didn't dive into the graphic novels or something ...

ebworthen's picture



"blaster monetary policy" might imply success though.

How about "Death Star monetary policy"?  Japan is Alderaan - they just don't realize it.

And may I add:  "The Spice must flow!".

Bearwagon's picture

Upvote for "Dune". It's actually not that fictional ...

Yen Cross's picture

  • Terrorist event> BTFD

  • Bird Flu> BTFD

  • Lousy macro #'s> BTFD

  • SNAP recipients at all time highs> BTFD

  • Your bank account get's confiscated(Diesel-Boomed)> BTFD

                                                               Chair Satans, plunge protection team has your back. BTFD...

HD's picture

As you said - that rubber band just keeps getting stretched further and further...




youngman's picture

No one is in the " no one is in the VIX....all quiet on the western front lads....just don´t stick your head up to high...

El Hosel's picture

.... The Team is apparently all over the Vix,  volume is huge on all the VIX "Products" so there are plenty of robots in those products to help maintain "Orderly Markets". Bernanke makes it a point to remind us  (and congress) how well the makets are doing and how low Volatility is, he has said flat out that the FED targets volatility and it shows, Loud and Clear.

slaughterer's picture

Gold plunges most  in 30 years > BTFD. LOL.  

ebworthen's picture

"Seeking Alpha" just deleted a comment I made eight months ago that contained the word "bullshit".

I hope I can still say "bullshit" on ZH about implied volatility versus real volatility; and that calling Paul Krugman the Bearded Potato isn't a hate crime.

Yen Cross's picture

   I have been a member at 'Seeking ETF's' for 2-3 years. Never posted there once. I like reading their earnings reports, and that's about it.