Two Big Weekend Stories and the Sleepy VIX
This weekend a Saturday night guest wanted to watch President Trump's speech to our troops in Japan. As the TV blared I was mercifully busy cleaning up in the next room after dinner, thus avoiding the direct assault of the talking head whose predictable comments blasted forth. She had one of the most grating, irritating voices imaginable. It even cut through the gallant efforts of the water from the kitchen sink faucet to soften them. I concluded this speech would be the big news of the weekend, with perhaps a concomitant jump in stocks market prices celebrating the flexing of America's military muscles.
By the next morning, though, it was old news. Taking its place was the arrest of Prince Alwaleed, famous billionaire investor, and dozens of other princelings of the Kingdom of Saudi Arabia by the recently appointed King. I think most of these folks are somehow related, one big not-so-happy family divided into various tribes, consistent with their desert history. So you could dismiss all this as a family dispute, I suppose. But since the U.S. government has chosen to tie itself to the Saudi tribes over the years, I concluded that that this purging would be the big news of the weekend. Perhaps we'd find a drop in stock market prices on Monday morning, given the uncertainty of the future of Saudi Arabia. We all know that markets hate uncertainty, right?
But within hours, a new story shoved the desert princes to the side: a gunman with an automatic weapon shot and killed 26 and wounded at a Texas church during Sunday services. At this point, that story now stands as the big weekend news. By this time, I had no views on the impact of Monday morning prices, the horror of the evil perpetrated by this gunman frankly overwhelming any thoughts of stocks and bonds.
So we progressed from the triumphant declaration of American military might, to the dramatic overturning of the existing order by one of the American government's staunch and purportedly stable allies, to the truly terrible mass killing of Christians gathered together to worship God on a Sunday morning. Unusual and disturbing background for the coming week, to be sure.
And yet, one finds the markets rather placid in the face of all this. The VIX, a/k/a the "fear" index, has wallowed in the lowest nether regions of its readings for so long, it appears that it's finally fallen into a state of stupor, unable to be aroused by any news. It continues to do so at this early hour. Then again, as we've often noted, the connection between news and the price movements of the markets is generally tenuous and always exaggerated by financial media. With the continued somnambulist behavior of the markets so far this morning, though, we haven't read or heard any attempts to make a connection between the events of the weekend and market activity.
And so the sleepy VIX continues to be the underlying big story in markets, as it has been for what seems like forever. Fear has been put to rest forever, it would seem. Of course, we all know that will change - someday.
By the next morning, though, it was old news. Taking its place was the arrest of Prince Alwaleed, famous billionaire investor, and dozens of other princelings of the Kingdom of Saudi Arabia by the recently appointed King. I think most of these folks are somehow related, one big not-so-happy family divided into various tribes, consistent with their desert history. So you could dismiss all this as a family dispute, I suppose. But since the U.S. government has chosen to tie itself to the Saudi tribes over the years, I concluded that that this purging would be the big news of the weekend. Perhaps we'd find a drop in stock market prices on Monday morning, given the uncertainty of the future of Saudi Arabia. We all know that markets hate uncertainty, right?
But within hours, a new story shoved the desert princes to the side: a gunman with an automatic weapon shot and killed 26 and wounded at a Texas church during Sunday services. At this point, that story now stands as the big weekend news. By this time, I had no views on the impact of Monday morning prices, the horror of the evil perpetrated by this gunman frankly overwhelming any thoughts of stocks and bonds.
So we progressed from the triumphant declaration of American military might, to the dramatic overturning of the existing order by one of the American government's staunch and purportedly stable allies, to the truly terrible mass killing of Christians gathered together to worship God on a Sunday morning. Unusual and disturbing background for the coming week, to be sure.
And yet, one finds the markets rather placid in the face of all this. The VIX, a/k/a the "fear" index, has wallowed in the lowest nether regions of its readings for so long, it appears that it's finally fallen into a state of stupor, unable to be aroused by any news. It continues to do so at this early hour. Then again, as we've often noted, the connection between news and the price movements of the markets is generally tenuous and always exaggerated by financial media. With the continued somnambulist behavior of the markets so far this morning, though, we haven't read or heard any attempts to make a connection between the events of the weekend and market activity.
And so the sleepy VIX continues to be the underlying big story in markets, as it has been for what seems like forever. Fear has been put to rest forever, it would seem. Of course, we all know that will change - someday.
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