WTF Chart Of The Day: VIX At Pre-Crisis Lows, Uncertainty At All-Time Highs

Tyler Durden's picture

Submitted by Jennifer Thomson via Gavekal Capital blog,

Recently, we have highlighted a number of divergent trends between ‘soft’ data and ‘hard’ data in both Europe and the US. For the most part, improving survey responses remain unconfirmed by the quantifiable information currently available. The surge in the economic policy uncertainty index is no exception.

In 2016, uncertainty rose around the world, led by the UK (unsurprisingly).

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With that rise in policy uncertainty, we would have expected to see an increase in market volatility. After all, through 2015, major spikes in the simple average of the above policy uncertainty indexes coincided with a significant (above 30) rise in the VIX.

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Last year, with the exception of a Brexit-related spike to 26 and an even smaller surge in reaction to the US election in November, the VIX averaged just under 16 (about 25% lower than its ten-year average of more than 21).

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While the average level of economic policy uncertainty fell somewhat from November to December, it remains quite elevated versus the VIX at 11.49 today (about one point above its low near 10 back in early 2007).

In a reversal of the trends we have observed elsewhere in economic data (positive survey data, unconfirmed by the numbers themselves), the ‘hard’ data from markets here seems to be telling us everything is a-ok while the policy uncertainty data would indicate cause for concern.

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Idaho potato head's picture

What me worry, I mean what could go wrong?

Oldwood's picture

A fast snap down and violent riots in DC and lets just wait and see if they will let Trump take his seat.

They MUST protect us.

auricle's picture

If Trump gives the nod that he will do as he's told, the uncertainty index will catch down to VIX. If not, VIX catches up to uncertainty. 

order66's picture

Just one of the 2 main central bank tools. The other being USD/YEN. "Whatever it takes".

NugginFuts's picture

 

<---VIX represents uncertainty

<---VIX no longer holds any meaning

spastic_colon's picture

VIX still useful at the extremes........nothing else

 

you dont think they are just going to tiptoe thru 20k do you?

Oldwood's picture

Like gas release before a major volcano eruption, it only is enough to warn those truly paying attention. As there are no real markets that do not have the fat finger of manipulation driving them, to attempt to predict from NUMBERS is a waste of time. Simply be prepared because if there is anything for sure is that they will do everything possible to prevent us being able to predict anything until it is too late.

gatorengineer's picture

Its extremely low and has been against a gross bubble.

Nobody For President's picture

Maybe VIX is a 'fear index' - and fear is not correlated with uncertainy.

Or maybe vix is just another manipulated piece of shit that meant something once, but does not anymore.

Or maybe vix has just become more fake news.

I sure as hell don't know.

Bill of Rights's picture

Been saying this since 08 the VIX is being gamed by some pretty deep pockets.

Bryan's picture

It looks like I picked the wrong year to buy UVXY.

King Tut's picture
King Tut (not verified) Bryan Jan 11, 2017 4:20 PM

You actually hold that overnight?

Bill of Rights's picture

What Obama would say to Buddy Love...

Bryan's picture

Unfortunately yes... I guess Armageddon only gets to occur one time?  :-)

GUS100CORRINA's picture

Owning UVYX is not wrong, but the CBs have these markets so screwed up that when it goes wrong, it is really going to go wrong.

We have the FED and the PROGRESSIVE LIBTARDS to thank for really screwing up the future.

To see just how bad the manipulation has been, take a look at a long term chart of TVIX as an example.

Six Years Ago, TVIX share would have been 3,000,000 and today it sells for 6.85. This kind of thing does not happen without intervention and manipulation.

No wonder TEPPER was do bullish for so long .... He had inside information.

 

E.Shackle.Ton's picture

It's different this time.

Osmium's picture

A strong 3:30 ramp could actually put the DOW over 20k.  Can they do it?

Traderone's picture

3.30 ramps are normally used to get us back to VWAP from much lower levels and seen as we are back near the highs then I suspect no 20K today. Of course I could be talking total Bollox but only time will tell.

Snaffew's picture

the question is...why would they do it?  These markets are ridiculous---actually, they aren't even markets---they are just a central bank, financial institution fueled vehicle for equity appreciation with no representation.  the valuations in this environment are other worldly.  Fucking ridiculous.

Stormtrooper's picture

Certainty that central banks will continue to interfere in the economy remains at 100 percent.

Youri Carma's picture

Everybody knows the VIX is fixed, the poor stay poor, the rich get rich, that's how it goes ... everybody knows.

https://www.youtube.com/watch?v=Lin-a2lTelg

Clowns on Acid's picture

Dear Jennifer,

Are you on Juniper ? Economic Uncertainty Index is higher than VIX Index and you are wondering why? The composition of the Economic Uncertainty Index includes three types of underlying components.

  • One component quantifies newspaper coverage of policy-related economic uncertainty.
  • Second component reflects the number of federal tax code provisions set to expire in future years.
  • Third component uses disagreement among economic forecasters as a proxy for uncertainty

As you may be able to infer newspaper coverage would include a lot of actual businesses, you know brick and mortar stuff. Tax codes expiring? Don't worry the leeches will get you another... brick and mortars just wonder which way will cause them the least pain, "disagreement" amongst forecasters is a joke ... a joke that few understand.

So...compare the realities of above to the components underlying the VIX Index = a popular measure of the implied volatility of S&P 500 index options. That is the EXPECTED standard deviation (non Directional) of S+P equities. Only the Fed, Goldman and JPM are privy to the when and how much QE printed money goes into buying (Directional) of ETFs, thereby. possibly illegally certainly immorally, these 3 entities share all of the CERTAINTY of directional movement of the S+P Index.

This Certainty leads to a LOWER VIX Index.

Are you now clear on the concept? Lemme know if you need anything else explained....so as to prevent the publication of Fake News.    

LawsofPhysics's picture

LOL!!  Please the VIX and gold have long since been detached from reality.