Daily Brief – Volatility

Volatility

Good news and less good news. As we have written recently the Vix or Volatility Index was trading in the high teens before the recent market turmoil on the back of Japan raising interest rates, USA not raising rates and a poor US unemployment number. Then the Vix shot up to 65 before plummeting back to 15 where it is today. Market pundits have given a name to this volatility: fragility. What they are grappling with is how markets can be strongly positive before giving way to despair and then returning to positivity all in the space of 10-15 trading sessions. What we can look forward to is more such violent market moves given the way markets trade in these days of correlation, instant communication and crowd mentalities. Gold has been a beneficiary of the most recent events as investors have sought refuge in the ultimate safe haven commodity.

Gold $ 2537.

UK plc

Following on from the piece above and as an illustration of fragility, the UK was described this weekend as a Goldilocks economy : decent growth, falling inflation and rising employment all acting in support of a benign falling interest rate environment for the UK. Now that is a turn up from the view of the UK typified in a Guardian newspaper article just 10 days ago when GBP and the UK sounded done for.

GBP/USD 1.2945.

Nigel Farage

A UK MP’s salary is GBP91000 per annum and in addition to that Nigel Farage one of the very newest MPs is paid almost GBP 98000…per month by GB News. One of the quirks of Britishness is to hold dear someone who has been vilified for being seen to incite the most extreme views and violence that have given rise to the riots in so many British cities recently. All that’s missing is a commensurate rise in GB News’ viewing figures.

EUR/GBP 0.8519.

Papua New Guinea

The Pacific island state is home to 312 tribes and over 800 languages which historically at times has caused bitter conflict  and even today some inter tribe violence. In an effort to encourage harmony PNG organises the annual Mount Hagen Show where tribes demonstrate their individual cultures and thousands of tourists attend. On the assumption that most readers will be unable to attend, we are all missing out on face paint, masks, headdresses and skeleton designs with hopefully plenty of competition but little in the way of tribal violence.

USD/JPY 147.63.

Crazy

By this day in 1988 the jukebox had been around for 100 years in one form or another and this song by Patsy Cline was named as the most played number on jukeboxes followed by Elvis Presley’s Hound Dog:

Crazy, I’m crazy for feeling so lonely
I’m crazy, crazy for feeling so blue
I knew you’d love me as long as you wanted
And then someday you’d leave me for somebody new

Worry, why do I let myself worry?
Wondering what in the world did I do?
Crazy for thinking that my love could hold you
I’m crazy for trying and crazy for crying

And I’m crazy for loving you
Crazy for thinking that my love could hold you
I’m crazy for trying and crazy for crying
And I’m crazy for loving you

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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