Dec 18, 2023 - Economy
The stock market's "fear gauge" is at its lowest level since the pandemic
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The stock market's "fear gauge" is down to its lowest level since the start of the pandemic.
Why it matters: Volatility is a key constraint on traders, investors, hedge funds, investment bankers and basically everybody on Wall Street.
- When it spikes, these players tend to pull back on activity, but when it falls, they tend to put more money to work.
- If the current low levels in the VIX persist, you'll likely see a jolt in Wall Street activities from new bond issues, to IPOs to increased lending from banks.
What they're saying: "Equity volatility is dropping ever lower. That makes all kinds of deals and investments easier, so a resumption of initial public offerings in a big way in the new year seems likely," wrote John Authers, the thoughtful financial columnist over at Bloomberg.
The bottom line: The low VIX is waving a red flag at the proverbial bull market, and we could be in for an end-of-year romp.
