This page has been archived and commenting is disabled.
US Complacency Near 9 Year High Versus Europe
Europe's VIX broke back above 28% today, sending it to its highest level relative to US VIX since 2003 and almost three standard-deviations above its long-run norm. So what, we hear you cry - didn't you see European PMI and unemployment and the glorious ISM data in the US yesterday? To which we counter, US equities and European equities are not diverging dramatically, US investment grade credit and European investment grade credit are not diverging dramatically, and macro-economically the two regions have been trending down together in terms of negative surprises. We assume that VIX is holding relatively low to V2X (Europe's VIX) due to market expectations that The Fed will be first to flinch in the game of global thermonuclear money-printing war; however, until we see a significant drop in US equities (and therefore the implicit risk flare and rise in VIX), we suspect Bernanke is cornered. With VIX relatively 'cheap' to its realized vol (as we noted here), perhaps Europe-US Vol-compression trade (ahead of NFP at least) is worth a look - or more simply if you are bullish Europe, sell vol (as its the richest asset) or bearish US, buy vol (as its the most out of line).
Short-term VIX vs V2X is dramatically divergent...
Long-term VIX vs V2X is almost 3 standard deviations divergent. This infers that US volatility (or in this case complacency) is near nine-year lows relative to Europe...
But US vs European stocks are not massively divergent...
and neither is US investment grade credit relative to European investment grade credit...
and at the same time US and European economic expectations are missing in the same trend - which may surprise many - but the point is that in the US we had higher hopes which are being dashed at the same pace as Europeans now...
Charts: Bloomberg
»
- 7128 reads
- Printer-friendly version
- Send to friend
- advertisements -
Complacency is the magic talisman of those invested in the system.
Complacency works pretty good I guess, until everyone suddenly panics and bolts for the door.
When they find out we're hitting our limits to growth we'll see the run for the exits
Everything works fine, until it doesn't.
There's reports around that Israel has moved lots of divisions on the Israel-Egypt border... Maybe in preparation of the election or something else??
After all...
Report: Egypt's ruling military council to ask for delay of presidential elections (Ch. 10)
Something might be brewing...
and Art Cashin is writing (at the bar) his "I told you so" news letter.
Sometimes it feels like it's early May 2010 all over again ...
... but then I shake myself and realize things are not nearly as good now as they were then.
On that whole complacency topic:
http://www.timesofisrael.com/knesset-approves-call-up-of-22-idf-battalions/
No, conspiracy monkeys, you are not allowed out of your cages.
This isn't the whole "bomb Iran" story.
This is the follow up to "What happens when Egypt turns democratic" story
cough, cough,bullshit,cough
barliman
P.S. Israel bombing Iran is maneageable ... maybe. Syria and Egypt (with Hezbollah, Hamas & Iran) attacking Israel = clusterfuck for sure
Tyler, I think it is time to post the Bernanke videos from 2006 when "Subprime is Contained" and the 2 videos from 60 Minutes when in one he says he is printing and then the other when he says he is not with a quivering lip". We need a little humor as we watch the Titanic fly towards the iceberg!
Here's a video I made a while ago. It's got some of those clips in it.
http://youtu.be/pkozUdoXpqo
In other news, Octomom has signed up to do porn...
Yuck, even I wouldn't hit that ho.
They better strap a 2 x 4 to their ass so they don't fall in.
and the SPX just crossed back over into 1400 in celebration.
tick-tock goes the crash clock...
hate to tell you this but from the charts im looking at VXX is about to collapse. if it breaks $16 on volume, next stop is $12, then $6. I'm scratching my head about this cuz all the macro data im looking at is horrible. but charts dont lie. next few days are crucial
OT: Charles Biderman and Greg Hunter interview....
http://usawatchdog.com/charles-biderman-eu-debt-crisis-going-to-get-worse/
just posted today.
Sit back and relax. Obama secured the opium at least until 2014.
Confucius say, Market that can not go down, must go up
The EU is not the US. The US has what is the US Constitution. The EU could become like the US if they joined forces and fight 2 world wars and kick everyones ass in it. With the head of the EU in the CENTER and president of the US on their left or right. This will never happen.
USA #1
The problem with the US, indeed any superpower, is that its people tend to think its society is invincible. Which is true, until it isn't.
Sure the Romans felt the same way.Know the Brits did.
Good luck with that bigoted superiority complex of yours.
And No, this time is not different.
winston churchill was mentally ill
Half Yank.What do you expect.
"US Complacency Near 9 Year High"
That is before Americans wake up: http://www.youtube.com/watch?v=EW5IdwltaAc&feature=youtu.be
This spread is probably a good depiction of reality. We are one round of printing behind the EU so there is still hop(ium) that our next printfest will fix everything.
Stock market waiting on Bernanke. Bernanke waiting on stock market.
tl;dr
yawwwwwwwnnnnnn.
There has been tremendous divergence between US and European equities over the past three years. The time frame in your chart is too narrow. Last three years, annual return of MSCI North America is 19% while MSCI Euro Area is only 4% (in USD terms). Valuations for comparable multinationals in US and Europe are significantly higher in the US.
The financial crisis is all about imbalances. The European PIIGS are getting beat up for theirs, but the biggest imbalances are in the US. The complacency is about the ability to print unlimited reserve currency to meet their obligations. It won't last much longer given the exponential curve they are on. They may have a longer rope than Greece, Portugal, Spain etc, but when the dust clears they'll be hanging from it just the same.
as the bulls would say:
"i can get out in time"
"i am smarter than the other bulls"
"this time is different"
"ben will save us"
etc, etc, etc....
Saint Elmo's Fire glowing on the horns of large herd milling about in the twilight...
the smell of ozone in the air and you know something is about to happen...
So what.
Yea really....'US complaceny' simply meaning the FED is ramping markets and refuses to allow any drop....thats 'complacency'? Not how I see it, it just means markets are totaly controlled.
Somebody wake me up when something real actually happens and these wall street wackos land in prison.
Bloomberg - Feb. 28, 2012
Icelandic Anger Brings Debt Forgiveness in Best Recovery Story
'Bernank is cornered until markets drop'...and we all know any little drop is immediately panic recovered, so that wont happen. So then, coasting along on fumes hoping for the best?
Tyler,
Thanks for changing your advertisers.
Previously you had Glenn Beck selling overpriced silver.
Now you have young women selling T-shirts and the Russian women selling themselves.
Much appreciated.
i saw cramer advertise here once
oh, fuck...
US Daily: 2012 US April Payroll Preview: Sluggish
http://www.cnhedge.com/thread-4078-1-1.html
http://www.jinrongbaike.com/