"You Are Here": Citi's Stunning VIX Chart

Something snapped in the VIX complex, seconds after Friday's early close, sending it to a new record low of 8.56 at 13:00:14 ET...

... which as we showed yesterday, was less than 10% of the all time VIX high of 89.53, hit on October 24, 2008.

However, while the Friday VIX snap - which is still on the feeds and thus wasn't a fat finger error - is yet another indication of just how broken, and/or how overrun by vol sellers the market is, below we present two even more striking, longer-term perspectives on the VIX courtesy of Citi.

As Citigroup notes, even after the recent backup, the VIX index is in its 0.5th percentile – that is, historically it has been wider than currently on 199 out of every 200 days. In other words, the "you are here" on the chart below has never been more to the left.

But it is not just a question of having reached this low level of implied volatility. As much as anything it is about the extended period of time we seem to be spending there.

Which brings us to one of the most striking VIX charts we have seen: as Citi's strategists note, over the last six months, VIX has spent more than 40 days below 10. Putting this staggering outlier in context, the index has never managed to accumulate more than 6 days that low, measured over the same time interval, over the last 30 years. Or, as today's central bankers would say after one look at the chart below which they have created "perfectly normal."

Commenting on the above charts, Citi, which has turned increasingly bearish on credit in recent weeks, says that "implied vol is, in other words, sailing in the same unchartered waters as corporate credit", and concludes sarcastically, "why buy vol if you believe that any selloff is impeded by a central bank backstop?"

Why indeed?

So keep selling vol until one day vol finally explodes as CBs lose control, wiping out trillions in fake wealth in the process; just please don't use the words "market" and "price discovery" until that happens.


Pandelis BullyBearish Sat, 11/25/2017 - 12:58 Permalink

another way to look at this chart, is that investors take Fed Chair Janet Yellen at her word when she declared no more crisis in our lifetimes.  Sounds good to me as long as she is proven right.  As a former Citi Chairman put it you have to dance if the music is still playing (enjoy dancing while it last ... worry about chairs is for later...)

In reply to by BullyBearish

BandGap cossack55 Sat, 11/25/2017 - 11:17 Permalink

Peak insanity is here, what you are referring to is the reaction to peak insanity. The reactions are muted until a majority of people wake up and realize what is going on.That's what drives us all crazy, like seeing a flying saucer hovering above your house and it isn't registering with your neighbor, even though you point right at it.It's a combination of stupidity, ignorance or just plain believing the bullshit. But it is agonzing at times to have to wait as the layers get peeled. When all of this voodoo economics matters to The Man on the Street all hell breaks loose.One man's peak insanity is another man's superbowl commercial.

In reply to by cossack55

two hoots Cognitive Dissonance Sat, 11/25/2017 - 10:21 Permalink

 Don’t think it unusual that some are considering of getting out of equities/taking the profits and let the current “where the hell are we” stuff settle out, maybe for 3-4 months?  The consumer market seems the most risky and “think” that as soon as the holidays are over many will look back at their overdose of credit and either stop purchasing for a while or some just default/start over?  Big industrials, those not overloaded with debt (GE?) seem to be doing okay as we are in a industrial tech revolution energy changes/robots/AI/cloud/5G/software driver everything stuff.   "Select" tech could continue to do well.  Also some of the consumer basic stuff will do well as people must eat, stay clean (WMT?).   Anyway it might be a time to review and it all depends on where you are (age/needs).  But where to park your money and it be safe?  I know precious metals, but how liquid are they if you want back in quickly after a pull back?  It may be a ponzi to everone else but to me it is something to use.  Musing  

In reply to by Cognitive Dissonance

Kefeer two hoots Sat, 11/25/2017 - 10:51 Permalink

Considering the god we serve named "Materialism" and the ego of ourselves being fed by advertising that starts in early September now; and considering the Baby Boomers created the feeding frenzy and have sold so many generations down the proverbial toilet and they are not done....they will be the means to get the further raping of current & future generations by the implementation of a single payer system as that generation has been effectively used by Satan feeding of the god of "Materialism". We are headed for the place where there is no place to hide and all is controlled by government, which is ran by a few who are demonic in character.  More and more people are also acting/behaving in a demonic way because they have forgotten what it means to be humane or human and the serving of that god "Materialism"; is the serving of self.  The more a society serves self, the more enslaved that society becomes and that is counterintuitive to our ways of thinking, but it is true. musing & babbling...sad because people have lost their identities; so everyone makes up a false one...think social media.

In reply to by two hoots

two hoots Kefeer Sat, 11/25/2017 - 11:21 Permalink

It is true that we have lost a good portion of humanity, being humane.  I "think" some of that comes from/lost from when we were dependent on each other (old days just before the boomers got going) in many ways but that, humanity role, has wrongly shifted to the federal government as the population expanded, along with the expansion of the needy, and people become more independent and able to support themselves with adequate work and that is where they now focus.   I think people still care but it is overwhelming and many suspect anything they give will be ripped off and only a small % will go where needed so they do it through taxes, through the government.   Even churches, mega churches especially are acting in the same manner, taking care of themsleves.  We have crossed the threshhold of the brave new world.   We ain't going back.  More off the top of my head musing.

In reply to by Kefeer

Cognitive Dissonance Bryan Sat, 11/25/2017 - 10:47 Permalink

I removed myself from the business of financial planning/brokering completely in 2013. I simply could no longer, in good faith, recommend 'investments' that were little more than carefully concealed and promoted speculation or gambling.Back when I first entered the 'bidness' in 1990, if I had advised an elderly couple in their late 70's to place 50% or more of their money in stocks, I could have been sued for malpractice and for being a danger to society.Now if I don't advise them to put 50% or more in stocks I can be sued for malpractice and for being a danger to society.Just cus everyone else is doing it doesn't make it right. Or moral.

In reply to by Bryan

Bryan Cognitive Dissonance Sat, 11/25/2017 - 11:18 Permalink

And thus, the quest for physical assets like gold, silver, platinum, real estate (and guns and ammo to defend them)?However, my thought about that is that perhaps transacting business with non-useable objects (like fiat, metals) will not be the most important thing.  I am thinking that forming cooperative communities with differing and complementary skill sets might be a better idea, where barter can be best used.  Having stores of wealth that are not practically useful, like precious metals, would have limited use maybe in the first phase of collapse when people are still interested in storing wealth in tradeable goods like commodities.  But I think that will dissipate if things get worse.  Let's hope we don't get to that point.

In reply to by Cognitive Dissonance

Blue Steel 309 Bryan Sat, 11/25/2017 - 13:21 Permalink

All tangible assets such as PMs and real estate will retain their same relative value after a reset. Historically there is a window where they will command a huge premium, and that is where fortunes are made.

But in the age of computers, I am not sure that window will exist after the next reset.

In reply to by Bryan

Pollygotacracker Cognitive Dissonance Sat, 11/25/2017 - 11:04 Permalink

Thank you. Everyone thinks I am crazy for NOT 'investing' in stocks. Once I regained my losses from the 'great recession', I got out of the fake market. I cannot in good conscience continue to be involved in what I believe is a central bank criminal counterfeiting enterprise. Read Leviticus Chapter 19. Just weights and just measures are commanded by the LORD GOD. We should answer to the higher authority. It will not end well. The fact that there are many Jews involved in this theft makes it even more egregious....because, they are supposed to know better. May God have mercy on their souls. I will NOT sin and risk my eternal life by disobeying. You can't take it with you. And, we will all stand in front of our Creator. Be warned.

In reply to by Cognitive Dissonance

Colonel Shitze… Cognitive Dissonance Sun, 11/26/2017 - 00:50 Permalink

Same, my firm pushed back any time I tried to balance out retirees extremely aggressive allocation. My manager plowed 80% of his book into mortgage securities because they paid most comm. at the time. They bullied everyone to follow his lead, I know it backfired big on him. About the time I got out, despite success, not willing to sell my soul. Respect CD.

In reply to by Cognitive Dissonance

GunnerySgtHartman Bryan Sat, 11/25/2017 - 12:35 Permalink

I am still in only cash and some TIPS in my 401k, and have been for a few years now. Like you, sir, I moved my 401k 100% out of stocks a couple of years ago; also stockpiling cash and PMs (and lead).  I've been criticized by a number of people for doing so, but I don't care ... people like you and me will have the last laugh when this house of cards collapses.

In reply to by Bryan

Cognitive Dissonance pizdowitz Sat, 11/25/2017 - 11:37 Permalink

If you didn't believe the Fed was still an effective force you would not worry about fighting the Fed. And the only reason the Fed is an effective force is because people believe in it....or at least believe it is still effective.If you didn't believe you could pass those fiat bucks off to someone else you wouldn't accept them yourself. Belief is the critical component to the Ponzi. But belief does NOT need to be absolute, just widely enough held to appear to be solid enough to hold.

In reply to by pizdowitz

RagaMuffin red1chief Sat, 11/25/2017 - 11:37 Permalink

Since I have no way to know what you mean by " a good way to play" here are two symbols to look at <uvxy>, <vxx>. Going long $vix seems the perfect contrarian play, but history has shown them to be "widow maker" trades  . If history is a guide, and you catch the rise you will have very little time to collect - with the options it will be hairier. 

In reply to by red1chief

milking institute red1chief Sat, 11/25/2017 - 12:23 Permalink

Since nobody has answered your question,too busy wallowing in their doomsday fever dreams,here's a few things you could do:  the obvious play ofcourse is TVIX or UVXY, the trick is timing as you do not want to hold them too long. they will be heading for zero without a significant spike in vol. I trade in and out,sell small spikes and buy dips but keep a core position.  second: shorting the QQQ as the FANGS will be liquidated first and hardest. PM miners,but only after the crash as they too will be initially sold to cover margin calls. third: CASH to go bargain shopping after the "event",i remember buying Corning at around 1.25 after the Dot com crash,everything was 75% off the regular price.   last but not least gold and silver coins and bars,easily convertible into cash. remember the signs on every corner back in 07?   "WE BUY YOUR GOLD!"   happy trading.

In reply to by red1chief

razorthin Sat, 11/25/2017 - 10:06 Permalink

There is no way that this doesn't portend the masacre of masacres.  It seems this "market" is waiting for me to capitulate, in which case its going to infinity.

Honest Sam Kefeer Sat, 11/25/2017 - 12:25 Permalink

Nothing Ironic about it.We have always lived like what we eseentially are:  Animals. Our attempts to put a veneeer of civility, bonhomie, and other artificial constraints on our behavior have never succeeded for very long.We are young merely a few millennia old and have a great deal more evolving to do.  Takes eons. We just have greater and more universal communications to provide us with instantaneous examples of our species behaving badly. 

In reply to by Kefeer

small axe Sat, 11/25/2017 - 10:06 Permalink

when VIX is driven to zero the bankers and policymakers will tell us that we live in a perfect world, and the police will be posted on every street corner to ensure that we believe it

b-sugar Sat, 11/25/2017 - 10:06 Permalink

vix is doing his job, bonds are out of the equation, everybody is loving stocks no matter the news and PER.  this chart has as much sense as " s&p with a close >2400" 

spanish inquisition Sat, 11/25/2017 - 10:15 Permalink

Well it looks to me like the central banks have everything under control. It truly is a centrally planned economy with complete destruction of risk. Well done! Even though I am already "all in" I think I can still lever up a bit.  /s

jamesmmu Sat, 11/25/2017 - 10:20 Permalink

VIX is just like CDS in 2007-08, ppl who holding it pose a risk of wipe out because triggering it will require a signaficant defaults to happen and follow up a market crash or sell off. its very hard, most of ppl who cant make it to the crash, very few did (in the big short movie), but they are just a few in the thousands of people who believe the crash will happen. Historically, FED or central banks are always the one who trigger the collapse. they knew and saw the bubble, but wont say it until it happens. bubble always happen and burst, because greed can go on infinit, the bad loan can pop up to the point fed will have to sacrfice someone and save others when the situation is out of control.

Kefeer Sat, 11/25/2017 - 10:34 Permalink

Volume is artificially created like all others, which is why only a few actually turn a "net profit" over time...you must have inside information.  10-15 years ago the markets would react to all kinds of geo-political news and now it reacts for 5 minutes or less if at all.  The chart has meaning to the one creating it and the one using it before it is "an old chart".