March 06, 2012 at 15:33 PM EST
VIX Rises; Mines & Tulips
Volatility is on the rise. The VIX, that measure of market fear otherwise known as the Chicago Board Options ExchangeÂ’s Volatility Index, rose nearly 17% Tuesday, or 3.06 points, to 21.13. Based on real-time Standard & Poor’s 500 Index option bid/ask quotes, the current number is still relatively tame; the VIX spiked to 48 on [...]

Volatility is on the rise.

The VIX, that measure of market fear otherwise known as the Chicago Board Options Exchange’s Volatility Index, rose nearly 17% Tuesday, or 3.06 points, to 21.13.

Based on real-time Standard & Poor’s 500 Index option bid/ask quotes, the current number is still relatively tame; the VIX spiked to 48 on August 8, 2011,  and above 80 in November 2008, according to CBOE charts. For funds that play the index, check out today’s post on the subject from colleague Brendan Conway.

The potential land mines in the investment garden: slower global growth in Europe and in China. Europe is staring down a do-or-die bond swap in Greece Thursday that, if it fails, could trigger a default.

And, leave it to Iran to keep nerves on edge, and Israel prepped to lob a few missiles in Iran’s direction.

Strategist Ed Yardeni says stock investors are tiptoeing through “tulips,” which include early signs that the labor market is improving. This should be good for stocks, but not so good for bonds, Yardeni says, adding that the February ISM number released Monday, at 55.7, while down from 57.3 in January, was “still one of the best readings in over a year.”

Yardeni concludes:

“It’s starting to look like a very big beanstalk could pop up in the labor patch on Friday. If so, then the Obama administration will undoubtedly take credit for having created so many new jobs. According to their narrative, they did so by bailing out the banks, the car companies, and the unions. Fed officials will say that their quantitative easing accounts for the pickup in jobs. My narrative is that the economy is performing better despite Washington’s reckless fiscal and monetary policies. It is profitable companies that are creating jobs.”

Barclays Equity Strategist Barry Knapp says that the first quarter equity rally so far has been driven by global central bank easing, and any sign the spigot is closing “could prove disruptive.” He doesn’t believe “QE3 is completely off the table.”

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