Volatility Is Cheap Right Now, Natural Gas rebounds, Europe outperforming

Volatility Is Cheap Right Now

The VIX Index has completely unwound its “Liberation Day” surge.

The Index traded back below 20 over the last few days. It traded around that level between September and March amid a strong stock market environment so it is a level investors are comfortable with.

The question for everyone today is whether the risk profile of the market is the same today as it was in March?

By some measures it is lower.

Russia and Ukraine are talking again. That is certainly better than not talking.

Iran is talking about giving up its nuclear ambitions in return for a removal of sanctions. That’s positive.

Trade deals are being signed and negotiated. That holds out the promise of free global trade if the trend persists.

However, by some measures the risk is higher.

Corporate earnings held up in Q1 but companies avoided offering guidance at the highest pace in years. That’s a sign of uncertainty.

Gold and bitcoin are rallying against a weak Dollar. That’s an additional sign of uncertainty.

Bond yields are uncomfortably high and the proposed Republican tax bill will add significantly to the USA’s debt burden.