Janice, re the VIX,
Good topic. I hadn't heard of the VIX until you brought it up earlier, and so didn't know what you were talking about.
but certainly it seems to be an indicator of anxiety.
Yes, anxiety & indecision. So re the VIX, would it be correct to assume that the market was going up and down in simliar % terms the past week, just before the Gulf War, and just before Oct. 87 unpleasantness?
I think people are nervous because of the fairly high market valuation in terms of forward p/e ratio. That's what A.G. was nervous about in his "irrational exuberance" speech. But at the same time, it seems many people are reluctant to embrace the "new era" idea -- that the economy can continue to grow at a very healthy pace without eventually causing higher wages, higher PPI, and .........higher interest. But yet we've had 7 months of declining PPI, with an economy that chugs along at +2%, no sign of inflation. And the Fed can't really raise interest rates without some sign of inflation (well I guess they can, but most don't believe they will). So...the debate rages on amongst the talking heads, and meanwhile Mr. Market doesn't know what side of the fence to get on.
What I can't figure out is how come so many people I hear quoted say that it's "very probable", "very likely", the Fed will "have to" raise rates later on near the end of the year. "If" the PPI, CPI, etc. don't show any increases, then I don't see how the Fed will "have to" raise rates. Apparently many people EXPECT the PPI and CPI to go up. If they go much lower, I suppose they'll have to turn back up eventually.
DK |
