Courtesy of ZeroHedge. View original post here.
Submitted by South of Wall Street.
SocGen’s news flow index suggests the VIX is headed between 40 and 50. They arrive at this by counting “the number of newspaper articles highlighting themes related to economic strength…
Historically they have proven highly sensitive to financial assets pricing, and
often lead trends by a few months.”
With the VIX holding 30 (twice the level we started the year mind you) on every ‘confidence’
rally, I won’t be surprised the day she blows. Whether it is China, Germany leaving the EU, or Israel lobbing one at Iran … we are in a very fragile environment, and I’m convinced that risk assets will not be able to handle any type of shock.
This is for a variety of reasons: confidence, liquidity, regulation,
solvency, etc.
The composition of this index from SocGen is not as important as the message that
we are in an extremely volatile environment – and volatility is
lagging. Be prepared.