tag:blogger.com,1999:blog-897456774486153841.post7986629140794713509..comments2024-03-28T06:07:36.391-07:00Comments on VIX and More: Zooming Out on Consumer SpendingBill Lubyhttp://www.blogger.com/profile/01241003017364820134noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-897456774486153841.post-65941454139018412662008-04-17T13:32:00.000-07:002008-04-17T13:32:00.000-07:00Thanks for weighing in credittrader (not to worry...Thanks for weighing in credittrader (not to worry, long comments are encouraged); you make several excellent points. For starters, the monthly chart of the XLY:XLP is much less clean than the one I put up, which is why I chose to focus on the past few years. In short, the ratio's action during the 2000-2002/3 bear market shows a lot more noise, but the correlation is still there.<BR/><BR/>With respect to housing, I'm not sure what sort of intervention (short of a foreign currency shopping spree) is going to kick start a turnaround. My sense is that only time -- and lots of it -- will turn things around.<BR/><BR/>Finally, regarding the embedded risk premium, this is something I continue to mull over, but don't have anything I am ready to share at this stage.<BR/><BR/>Cheers and good trading,<BR/><BR/>-BillBill Lubyhttps://www.blogger.com/profile/01241003017364820134noreply@blogger.comtag:blogger.com,1999:blog-897456774486153841.post-9504530914734433752008-04-17T13:20:00.000-07:002008-04-17T13:20:00.000-07:00Dear Vixman, love your blog - very interesting stu...Dear Vixman, love your blog - very interesting stuff but in this case - you need to drag your history back a little more to really see how crazy stuff can get...The current level of around 1.1x is way off the 0.84x lows back in Nov 2000 and March 2000 actually saw the highs of the last cycle at around 1.4x. We did also see a 0.9x reading on 9/11. I agree short-term bottoms in the last few years have tended to coincide with short-term bottoms in equities but I feel this time we have a more reflexive (hat-tip to Soros) self-reinforcing cycle turn. Talking my book but short-term money market stress is still there, VIX's ascending triangle breakout was seen back in 2000/2001 also and spiked post, and in my stomping ground of CDS, indices are trading considerably too tight (strong) compared to underlying component weakness.<BR/>Keep the info coming - i love it - especially the stuff on SPX/VIX, VIX/VXV etc - would love to see your thoughts on the risk premium embedded in this over the last few years - seems like if we discount the last few credit-expansion-fueled craziness, then we are mid range but hard to argue with the charts...I guess it is another nod Mr. Soros that we are expecting a reversion to some equilibrium when housing is unlikely to magically recover and find a bottom without some significant intervention that is unlikely to come before November...<BR/>Wow, this post went a lot longer than i expected...LOL.<BR/>cheersAnonymousnoreply@blogger.com