Capital Preservation During Times of Stress
Trade in Whisky;
Yesterday, the VIX spiked higher and reached 60 at the US opening. That is a very high number that has never lasted for very long. It reflects higher future volatility in the stockmarket, derived from inflated option prices, which reflects extreme market uncertainty. The modest dip to 45 is no cause for celebration, but the extreme signal likely marks a low that ought to hold in the short term.
VIX Index – Past Six Days
I show the VIX over 30 years using candles to highlight the intra-month highs. The 60-level seen yesterday is commensurate with the financial crisis and the pandemic. This is a full-on stockmarket panic, but that doesn’t mean the market can’t bounce. But we shouldn’t bet on it and instead take the prudent path.
VIX Index – Past 30 Years
For the stockmarket, some things are simple. To quote Jeffries’ Chris Wood,
“Tax cuts and deregulation are bullish. Tariffs and immigration controls are bearish.”
In that sense, financial markets are unashamedly globalist. There remain two distinctive groups. Europe and China are at the top, and the US (black), Nasdaq (red) and Japan (green) are at the bottom. The European insulation was broken by Trump’s tariff announcement.
Major Markets in GBP – 2025 (YTD)
Capital Preservation
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