One important observation: it is striking how far equity market volatility has fallen in three short months.
But not the U.S equity market, with the VIX (the Volatility Index, a measure gauging future anticipated stock market volatility) trading at an astonishingly low level.
Furthermore, the equity has weathered the recent market volatility, holding support at the 110 level as it consolidates its recent gains and moves sideways into rising support at its 10-week trendline.
Late Friday, the SEC said in a statement that "exceptional trading volume and price volatility of the equity market over the last few days raise the potential of even greater challenges" during NMS' phase-in.
Given their positive correlations with stocks and extreme cheapness, post-crisis, many of these types of bonds have simply been a lower-beta, lower-volatility way to access the strong equity market returns since 2009.
Today high-freq shops are responsible for some 50% of equity trades (down from 60% in 2009, as market volatility has ebbed) and a growing percentage of derivatives, such as futures and options.
His investment team came into the year with a cautious stance on the equity market, given the strong gains of 2012 and the likelihood of volatility from the debt crisis in Europe and wrangling in Washington over the federal budget.
In fact, emerging market sovereign bonds have produced equity-like returns at times in the past (with commensurately high volatility, of course).
Though volatility can rear its ugly head just about any time, but the overall environment for the equity market appears good.
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Meanwhile, Mobius says the derivatives market today is still so rife with bets made in different directions that major volatility is inevitable and the equity markets will suffer.
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