Wall Street No Longer Worried About Increased Risk, Volatility

Sep. 5.06 | About: SPDR S&P (SPY)

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

AHEAD OF THE TAPE: Fear. Not.

  • Summary: Investors no longer seem to be worried about market risk and volatility. One popular measure of risk, the CBOE Market Volatility Index, or the VIX, is back down to normal levels after reaching its highest point in three years. Other indicators moving in the same direction are emerging-market stocks and bonds -- risky securities that fell into a deep funk in mid-June and which have now bounced back. And in the corporate-bond arena, investors seem downright ebullient: "Now, almost any company can borrow any amount at close to historically low levels for almost any purpose," says Brian Reynolds, chief market strategist at brokerage firm M.S. Howells. With the economy showing signs of slowing, the Fed appears unlikely to raise rates this month after last month's pause, meaning market stability may be here to stay.
  • Comment on related stocks/ETFs: While Justin Lahart's piece implies that Wall St. has shaken much of the economic anxiety that plagued it this summer, there are many who are still apprehensive when it comes to the near future. They see negative signs on the horizon -- a weakening dollar/higher inflation, a looming housing market crisis, and lessening consumer confidence -- to name but a few. Andrew David Taylor believes the Fed Might Need to Do More to stave off an economic decline. CrossProfit deals with the possibility of a collapsing housing market pushing the U.S. into recession and permabear Investing-the-Middle-Way espouses the belief that weakening consumer spending will soon send the markets tumbling down.