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Fed CruciVIXion Sends S&P To New Record Highs
Having been told that there's no bubble in low quality credit, valuations are 'normal' in stocks, low volatility does not mean complacency, and there's no inflation (it's all noise you idiot); VIX was monkey-hammered to new cycle lows back to a 10-handle (lowest since Feb 2007). This smashing of vol led to a surging of "most shorted" stocks with the S&P hitting new all-time record highs. Post-FOMC, the S&P 500 rose 10 points, 10Y -4bps, 2Y unch, gold was unch, and the USD was -0.1%.
The CrucuiVIXion...
The short-squeeze...
The S&P surge...
tick for tick with VIX...
The broad stock market reaction...
The bond market reaction... (2Y unch)
The Gold reaction...
The USD reaction...
It is clear - The Fed would rather clean up the total disaster than attempt to avert it...
Charts: Bloomberg
Bonus Chart: WTF
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Piece of shit market. You too Yellen!
LOL, I see that Snarky Tyler is in da house today.
Yeah that's the highlight of my day, reading the snarky commentary. God I need a beer!
After listening to the Bernank for years, I never thought it could get any worse. Yellen just showed that it can, and will, get much worse.
I wrote a comment that after just a short while of Yellen, we'd be pining for the good ol days of Bernank.
There is one thing I find puzzling about the low values on the VIX lately.
The VIX is an index derived from the actual prices of options being sold -- and includes PUTs as well as CALLs.
I would think that the people writing the PUT contracts would be just a little bit concerned about the market going against them now, which should lead to a higher premium on the contract.
The only explanation I have is that the Int Rate component in the function is so low now that it is dominating the equation more than in the past. Similar in nature to when a value in a denominator approaches ZERO, the model becomes unstable.
Any comments?
who cares
You've gotta wonder, how much of this nonesense is just the powers that be pushing levers vs. the real market? That's an honest question. Is there someone LITTERALY sitting there all day ramping things up on their terminal or is this just total manipulation of the minds of the market players?
when you say real market....i mean look at today. The 10yr was around 2.64% pre announcement and 2.60% post fed announcement. If those 4bps represent a real market, then so be it. There is your real market. Everything is predicated on the bullshit data put out and HFT's to constantly buy in, and of course Zirp...always Zirp.
Throw out an accurate measure of GDP and incorpoate food and energy prices etc into the data and take away the fed backstop and you get higher rates, insolvent government, stock market crash, bond market collapse and currency collapse. That would be the "real market". The alternative to that is calling a move from 2.64 to 2.6 a real market.
Dam't Janet, keeps taking off my shorts.
Stay away from these Zimbabwe markets.
The banks are using their available funds to push this market higher.
and now EU/ECB <--> FED tautology is stronger than ever.
Eventually this thing could double before it cracks.
Dam't Janet -- and take a step to the left.
A fair analysis. At some point there will be a recoupling with reality/fundermentals.
But I digress, how much is your time worth to you in the meantime?
There is no "market" for true price discovery, who fucking knows how long this can continue.
My 2c:
We are all stuck in a power plant where the machines are harnessing our biochemical processes to generate energy while we are sleeping in a made up dream world.
Makes about as much sense as trying to figure out the world today.
pods
Time to que some Rage Against the Machine
http://www.youtube.com/watch?v=gJbqKLcCjp4
I feel the rage today!
That's an interesting idea. I don't think I know enough about VIX but your idea sounds plausable.
On another note, if anyone is buying SPY calls, it might be more profitable to buy VXX puts - some were up 600% today, vs. about 200% SPY calls.
Why not just buy and hold the XIV? This is not an investment rec just an open question.
Zeros in a denominator opens up infinite possibilities.
I think they call that a win-win.
i'm no expert but seems like Vol is crushed via the Vix ETF's to ramp the ES, in a perverse way .... but almost every fucking day?
The ETN, VXX, is derived from the value of futures contracts on the $VIX.X. There may be a small arb opportunity between the VXX and $VIX, but not enough to matter.
Here is the Prospectu for VXX & VXZ: http://www.ipathetn.com/static/pdf/vix-prospectus.pdf
Some key lines from that document are;
The return on each series of ETNs is linked to the performance of the relevant Index. Each Index seeks to provide investors with exposure to one or more maturities of futures contracts on the VIX Index, which reflect implied volatility of the S&P 500 at various points along the volatility forward curve. The calculation of the spot level of the VIX Index is based on prices of put and call options on the S&P 500.
Futures on the VIX Index allow investors the ability to invest in forward volatility based on their view of the future direction of movement of the VIX Index. Each index is intended to reflect the returns that are potentially available through an unleveraged investment in the futures contract or contracts on the VIX index plus the rate of interest that could be earned on reinvestment into the Index of the return on the notional value of the Index based on the 3-month U.S. Treasury rate. The S&P500 VIX Short-Term Futures™ Index TR targets a constant weighted average futures maturity of 1 month. The S&P 500 VIX Mid-Term Futures™ Index TR targets a constant weighted average futures maturity of 5 months.
VIX is a measure of 30d implied vol of put and call options.
Imp. Vol of an option is essentially the demand for that option, so while you are somewhat correct, if theres no one out there who wants to buy them then how the hell are the put sellers supposed to jack the prices up?
You offered a conditional statement; "if theres no one out there who wants to buy them then..." [sic]
I don't believe that your premise is true, therefore we can not make any logical conclusions.
Q.E.D.
http://www.cboe.com/micro/vix/vixwhite.pdf
If there is low premia for options for the near and next spx contract months (or next and third if within a week of expiry), and the risk free interest rate (bond-equivalent yield of the t-bill maturing closest to the expiry dates) is low, then VIX will be low. While I agree the negligible t-bill rates bring down the VIX index some, they have been this low all year, aside for a tiny blip back in February.
Brave New World... zero volatilty, and risky asset prices go up 1-2 % per month, pass the SOMA
Belgium will buy our debt and in doing so will help the +26 week unemployed worker re-train for a new job selling waffles
Belgium will buy our debt and in doing so will help the +26 week unemployed worker re-train for a new job selling waffles
you're a clever and devious one, Master Henry
Jedi Henry
Fuck you Yellen! You ignorant whore!
downgrading growth is great for moar money printing. it truly is the only thing that matters. until the entire system implodes. one day, everyone will wake up and there will be nothing left. your "savings", stocks, bonds, etc.....vaporized.
this shit is so insane,
every time this cunt talks, we all know what is going to happen. stocks go green, its not even a question, it will always happen.
she will never say anything to piss the market off, never ever ever, that is all she is worried about, she will continue to lie through her fucking teeth as long as she can just to pump the market up and enrich her asshole banker cronies.
some guy on cnbc just put it best.
it should scare us how janet yellen knows just as much as we do, or at least she acts that way.
this is not a fucking leader, this is a fucking cunt who needs to be taken care of.
'Its clear, the Fed would rather clean up the total disaster than try to avert it'
Nah, the total disaster has been the entire point all along, then the lunatics can proceed wit 1 global central bank with their real goal of 1 global currency, etc.
It's fucking groundhog day. Remember the market NEVER falls on a FED day. Today's ramp will last a week or so and the market will fall back down again. Since you can't short this market, your best bet is to stay away.
VIX trading over 5 is expensive, ALL OTM index puts with bids need to be sold with reckless abandon; its free money. Any idiot that wants to buy a put come take a fill and then enjoy your loss.
Crazy Talk!
Now let's see what happens when everyone around the world with a paper claim on a real asset demands delivery.
Bring it!
Roll the mother fucking guillotines my friend.
Cunts.
;-)
nothing changes otherwise. digital "paper" can be "created" forever...
cunts indeed...
Guess I need to rummage through my sock drawer and find where I stashed the DOW 17,000 and S&P 500 2,000 hats two weeks ago.
And, yeah, I am doing my best to jinx it.
Herod in-chief simply can't allow this market to dump. his ratings are already lower than yellens titties
I figure it's going to tank on Mon. November 10.
Is that Veterans Day? A final F.U. to all the dumb fucks that "served" our great nation?
I have an S&P fever, and the only cure is MOAR COW BELL!
I like how gold acted - long UGLD now in a big way, content to hold for a while.
I think Asia has made their move re the USD.
Covered another losing short ... before the ramp, thankfully.
More the yield will come down, more the Index will go UP. That's easy, so I don't understand all this WTF if the two charts are diverging...
The Old Testament 7-year cycles WILL have an impact on this market:
2000(-47%)------->2007(-57%)--------->2014(??)
Clothing the Emperor / Empress
Opportunity cost is the implicit foundation.
The American Dream, trading off natural resources to the global cities in return for toys built by their slaves, like all empire operations, is war, over artificially scarce resources. Clothed by empire, the majority simply remanufactures itself, in civil marriage, enslaving its children to debt as a shock absorber, for when the book busts, as it always does.
Civil marriage, a blood knot among enemies and mercenaries, power couples consuming theoretical NPV with laws of succession, merely creates the illusion of peace and economic mobility, while the surplus lasts. History is not the story of peace; it is the story of mythology, propaganda and war.
Built on political fiat, the proprietary market can only print until it can’t, to create the illusion of authority, to feed its consumption, which is always a false sense of security. Whether crowned by lords, senators, cardinals or commoners, the monarch plays the lead fool, in temporary alliances built for the purpose.
Because feudalism incorporates an increasing number of layers does not make the verticals more democratic. Empire education can only become a lottery in a casino; the civil unions can only consume their own markets, to the end of cartel. Because the Bay Area is growing control over more slave populations globally does not make its outcomes more democratic.
A promise in a contract, built to be broken by a duration mismatch, employing a third party to confirm the ceremony, is not consideration. Empires are silly things, taken seriously only by fools paid in debt, to cast their family’s wealth into the fire of stupidity. “Blood is our only strength. Blood is your only weakness…”
Legacy can only efficiently consolidate the middle, which can only feed upon surplus, with arbitrary distribution. Effectively discounting the edifice, peer pressure competition for resulting scarce resources, is the path to prosperity. nR compilation presents a false opportunity, a threat, or an opportunity, depending upon perspective.
The idea that you are any less a child of God than any other character presented by History is nonsense. Do you really think Kissinger & Kids could have employed China as a lever without the Corporate Captains of the US Navy, or the consumer addicts in the drive-by Christian middle class? Why do you suppose they have a higher divorce rate than their predecessors in mythology?
Perspective is lost in the middle, with knowledge built upon expedient assumptions, and grown at the end, which becomes the beginning. The tree, the apple and the seed do not exist separate from their environment. It is not the fruit that you are harvesting, but the seed, and where you sow is not necessarily where you shall reap. Labor recognizes labor.
The rulers apply an arbitrary order on a fulcrum of fulcrums, already ordered, until buffer threshold, when they plead Act of God. They think they have power until they realize they do not, when it is far too late. Deferring short term consumption to improve quality of long term production, in a world ordered by the booms and busts of conspicuous consumption, is the NPV of labor, love as an offering.
You are not limited by the sides of the trash container, and there may be parts inside the container that are useful beyond the container. Only by wiring through and around gravity do you see it for what it is, the past.
You can grow together as a couple, to cantilever the fulcrum, or apart and watch the fulcrum collapse. In any case, the critters on the other side are going to believe in their self-delusions.
Love, making your spouse a priority above all others, against all forces brought to bear against it, requires practice. Take heart, for you are no less than any other. Raising children in the midst of empire appears to be a miracle, but it happens every day, all over the planet, new world same as the old world.
The critical path to the future is any path that widens your perspective to envelop the empire’s city. Inflation is not it. Negative interest rates, like all the bank’s arrows, simply translates the baseline under already self-serving political considerations creating the data. Debt simply serves to separate the cause from the effect, until it can’t.
Let’s say you have that job, supporting the majority that cannot help itself for lack of perspective. Investing in a reliable used car to grow your radius, to grow your business, home and family, is one decision. Taking out a college loan and a new car mortgage, on the promise of forgiveness, to step up a middle class layer on debt as credit, only to be collapsed later, is another.
Opportunity cost is a function of coupling for life, to move forward, as the foundation of economic NPV, which is why so many must bond together against it. The majority always votes to live in a cave, transaction by expedient transaction, which is why the empire always builds on sand. Empire is the history of failure.
Legacy can only employ technology to add layers of extortion. You can wire your life through and around it to make the process transparent, but leaving a derivative technology behind for legacy to steal and strangle itself with is simpler.
Value depends entirely upon perspective. Funny, how your position only changes with a change in perspective, to see what others cannot.
You forgot the most important "truth" or sentiment...
That which cannot be sustained, won't be, regardless of what people "think" or believe"...
Everythings is okay....that is why we are holding the beach ball under water some more..
there is no inflation...unless you want to eat, move, heat your home, have health insurance or care, need a plumber or an electrician, have your car repaired.
T shirts from Vietnam and gym shoes from China are cheap, however...
There is only 1 semi stable path out of this mess. The one thing the Fed didn't do that it needs to do is make IOER negative. Make banks lend to businesses to invest in productive assets rather than give to hedgies to speculate in financial assets... Change will come when everyone dumps (and I mean exits) all the bubblicious momentum stocks splits the proceeds 50% FRN and 50% gold. That happens and it is game over for the Fed and TBTF banks who rely upon control of money supply. It is ultimately what China and strategic international creditors are doing... They are letting our TBTJ hang themselves...
There is only 1 semi stable path out of this mess. The one thing the Fed didn't do that it needs to do is make IOER negative. Make banks lend to businesses to invest in productive assets rather than give to hedgies to speculate in financial assets... Change will come when everyone dumps (and I mean exits) all the bubblicious momentum stocks splits the proceeds 50% FRN and 50% gold. That happens and it is game over for the Fed and TBTF banks who rely upon control of money supply. It is ultimately what China and strategic international creditors are doing... They are letting our TBTJ hang themselves...
China invented paper money, paper promises, please, they know how to really crush a "revolution".
Yet China has physical in its possession. You think they are gonna send that back here rather than the fiat USD which they knows is going to be worth less (though likely not worthless)?
No. China will be one of the few with the option of partial gold backing... we'll have the promises of the Fed and its owners...
A literal Punch and Judy puppet show.
At least PMs were up today.
Today we saw another planned rally. It seems no suggestion of weakness no matter how subtle can exist because it may begin to unravel the already fragile consumer confidence. Also remember they don't want to enter the weekend or a holiday with a bad market. While I think the market is way to high and distorted it is difficult to time a top. More on the reason for bears to be cautious in the article below.
http://brucewilds.blogspot.com/2014/04/bears-have-little-reason-for-conf...
What do stock markets around the world have in common with "girls gone wild" the video of college girls on spring break? The answer is both are crazy out of control. We have grown very complacent as money around the world has continued to flow into intangibles and promises.
Currently the market is all a twitter and locked in a "greed and stupidity loop." The loop can be explained as follows, stocks are rising so why get out, not getting out is causing the stocks to rise. When stocks do pullback it is a buying opportunity. Yes, we are indeed experiencing a double down and let it ride mentality. I don't have to explain the greed part. More about this subject in the article below.
http://brucewilds.blogspot.com/2014/06/stock-markets-and-girls-gone-wild...