25.05.2023
Irrational Complacency? Watch Europe
The Qi Vol Indicator now stands at 23.4, well above the threshold of 20 which historically has acted as a red flag for a risk off move in equity markets.
In "Caution warranted" we detailed how our indicator can lead markets and this week VIX has indeed risen from 16 to 20.
Sovereign CDS and US Treasury bills are displaying signs of stress, but overall the striking feature is that financial markets do not appear to be unduly concerned about the US debt ceiling impasse. That has prompted talk that the irrational exuberance of the 1990s has been replaced by irrational complacency.
Cue hundreds of sell-side research reports using 2011 as a template. For asset allocators looking to identify which of their holdings are most vulnerable, or looking for cheap protection trades you can use historical precedents.
But you can also Qi's AI framework to highlight which assets are currently most sensitive to measures of risk appetite like VIX or the gold/silver ratio.
In "Caution warranted" we detailed how our indicator can lead markets and this week VIX has indeed risen from 16 to 20.
Sovereign CDS and US Treasury bills are displaying signs of stress, but overall the striking feature is that financial markets do not appear to be unduly concerned about the US debt ceiling impasse. That has prompted talk that the irrational exuberance of the 1990s has been replaced by irrational complacency.
Cue hundreds of sell-side research reports using 2011 as a template. For asset allocators looking to identify which of their holdings are most vulnerable, or looking for cheap protection trades you can use historical precedents.
But you can also Qi's AI framework to highlight which assets are currently most sensitive to measures of risk appetite like VIX or the gold/silver ratio.
