Volatility Index – February 7, 2022 – VIX

vix-2-7-2022

After a brief spike to 38 the VIX has drifted back into more historically neutral territory. The market is beginning to digest hawkish tone from the FED regarding rate hikes starting in March, as well as the total number of hikes set to take place this year. That coupled with a halving of many speculative stocks typically found in the ARK invest ETFs seems to have taken some froth out of the market.

What conditions will exist in March to warrant rate hikes that didn’t exist late last year? Perhaps the FED secretly believes most of the inflation is in fact transitory once supply chain pressures ease. Maybe the FED just wants to talk the markets down as far as possible without going through with the widely accepted 4 hikes in 2022.

What if we go from supply shortages to double ordering and then to surpluses? Add on to that tensions in Ukraine and covid headlines that just don’t seem to go away. Will the FED start a hiking cycle into the start of softening economic conditions? After months of jawboning on interest rate policy, the March FED meeting is just 5 weeks away. The FED is running out of time to kick the can further down the road.

Other Weekly Highlights

  • Crude oil over $92 Barrel
  • Bitcoin strong bounce off $30,000 to >$40,000
  • Gold holding firm above $1,800 oz
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