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“Volatility is a welcome creator of opportunity.” – Seth Klarman

Morning stock market summary

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Futures are modestly lower this morning as Asian and European stocks trade lower for the second day in a row. One of the main drivers of weaker sentiment has been a hotter-than-expected inflation report in the UK. That has lowered the odds of a June rate cut from the BoE, and treasury yields are increasing in response. We’ll finally get an economic report this week with Existing Home Sales at 10 AM, but the main event everyone has been waiting for all week is Nvidia’s (NVDA) earnings report after the close.

Last Friday’s close of 11.99 in the VIX ended a streak of 1,137 trading days where the index closed above 12. As the index closed just a penny below 12, it was hardly a convincing end to that streak, but yesterday it closed below 12 more convincingly (11.84), so we wanted to highlight it. As shown in the chart below, while the VIX traded at lower levels on an intraday basis last December, it hasn’t closed below yesterday’s level since late November 2019.

The just-ended 1,137-day streak of closes above 12 ranks as the third longest of all time and just the fifth time the index went more than a year without closing below 12.  The most recent streak before the just-ended streak was also the shortest of the five lasting just 287 trading days and ending in late November 2019 not long before Covid. The longest streak was coming out of the dot-com bubble burst and lasted 2,257 trading days or the equivalent of just about 5 years.

With the VIX now so low, does the lack of volatility equal less opportunity going forward?  In today’s Morning Lineup, we looked into that question and provided a summary of how markets performed going forward. To read that analysis, login or signup today

To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.

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