VIX At Pre-Pandemic Low: Is Wall Street's Fear Gauge Mispricing Risk Of Downturn?
Portfolio Pulse from Neil Dennis
The VIX index, Wall Street's 'fear gauge,' has reached its lowest point since before the pandemic, signaling reduced market volatility and increased investor confidence. Despite a slight increase on Monday, the VIX remains well below its long-term average. This trend correlates with recent equity market gains, particularly in riskier stocks like Carnival (CCL), which has risen 30.6%, and chipmakers Intel (INTC), Advanced Micro Devices (AMD), and Nvidia (NVDA), with gains of 25%, 28%, and 20% respectively. The VIX's current low levels are attributed to a more benign interest rate outlook and slowing inflation rates, but there is concern that investors may be mispricing the risk of an economic downturn.
November 27, 2023 | 8:36 pm
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POSITIVE IMPACT
Advanced Micro Devices has experienced a 28% increase in stock price, likely driven by the same factors boosting the broader tech sector, including a favorable interest rate and inflation outlook.
AMD's recent performance is expected to continue in the short term, supported by the low VIX and positive investor sentiment towards the tech industry.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Carnival has seen a significant gain of 30.6% in the past month, benefiting from the current market rally and lower VIX levels indicating investor confidence.
Carnival's recent gains are likely to continue in the short term due to the positive market sentiment reflected by the low VIX. However, as a riskier stock, it could be more volatile if market conditions change.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Intel has gained 25% recently, buoyed by the positive market sentiment and expectations of lower inflation and interest rates benefiting the consumer electronics market.
Intel's stock price is likely to be positively impacted in the short term by the low VIX and favorable market conditions for the tech sector.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Nvidia has gained 20% in stock value, aligning with the positive performance of tech stocks amid a low VIX environment and expectations of a favorable economic outlook for consumer electronics.
Nvidia's stock is likely to benefit in the short term from the current market optimism and low volatility indicated by the VIX, but investors should be cautious of potential market shifts.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80