Buy Gold & TIPS for Coming Volatility, Inflation: BlackRock
by Wolf Richter
WolfStreet.com
March 29, 2016
Dreading “volatility” only on the way down.
“It’s too quiet out there,” BlackRock Global Chief Investment Strategist Richard Turnill wrote in his market commentary. “Low volatility and inflation expectations look unsustainable.”
Volatility isn’t low because things are great. It’s low because the Fed and other central banks have “played a role in suppressing” it with their QE programs, he said. And between 2012 and 2014, they “dulled market volatility to unprecedented low levels.” But that ended in 2015, as the Fed, after having ended QE, began to flip-flop about raising rates.
It must be said that surging “volatility” – as measured by the Volatility Index (VIX), which represents expectations of 30-day price volatility calculated from S&P 500 options – isn’t associated with jumping stock markets but with swooning markets.
Volatility shot sky-high during the Financial Crisis and in late 2008 broke through 80 for the first time ever. At that point, QE was announced, and the VIX descended. In early 2010, it was back in the teens, and solidly below 20, the average since 1990.
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