The VIX Hits Three-Mont High

The government is still closed and the stock market is down again today. The market had been down about 1% early on, but now it’s down about half that much.

The politicians are involved in a stand-off and I’m inclined to think it will go on until someone has to make a move. Here’s how it stands: The country will exhaust its borrowing authority on October 17th. We’ll then run out of money sometime between October 22nd and October 31st.

One casualty of the government shutdown is economic stats. We didn’t get the regular jobs report on Friday, and many other reports may be delayed. On Wednesday, the Fed will release the minutes from its September meeting.

What’s interesting is that the stock and bond markets are actually quite calm despite the chaos in Washington. I think the choice of defaulting is so outrageous that Wall Street can’t take it seriously. I think that’s right.

The VIX hit a three-month high today of 18.54, but that’s still well below the levels we saw during the Debt Ceiling Crisis from two years ago. During the summer of 2011, the VIX was regularly over 40.

The market has a defensive posture today as telecom and utilities are up, and financials are down.

Posted by on October 7th, 2013 at 2:41 pm


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