The stock market's "fear gauge" is at its lowest level since the pandemic
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.