The VIX curve as a result is always steeper relative to say the VSTOXX curve which is mostly flat
This is why the VXX has been a very expensive hedge overlay for a book!!

Not to bash Obama but he is very clever closet socialist with agenda to rule this country for many years. His immigration policy of late is designed to win Hispanic votes and he is already on campaign mode for 2012. He may turn out to be another Putin once his 2nd term ends and wouldn’t be surprised Obama filling the elderly Supreme Court with his cronies and become totalitarian for years to come.

I am one of those “lurkers” who don’t post comments, but visit your site once or twice a day even on weekends. I found you by my good fortune and realize you are one of the best sources for information on the net. More, you are a source of attitude, thoughtfulness and modesty which makes me trustful of your opinions, even at times I disagree with you. Thank you for what you do!

I came across the following essay today and immediately thought to pass it on to you. It addresses the business/politics nexus in a brilliantly insightful way that may explain much of the malaise in small businesses.

I believe the fundamental cause of any so-called second dip is due to not cleaning up the problems which caused the first dip: a quadrillion $ of bad derivatives, hopelessly bankrupt banks, major corruption of regulatory processes, and putting the foxes in control of the henhouse. These all lead to the reluctance of businessmen to even plan for the future. The present situation is consistent with the inability to plan and is only aggravated by the sense of dread arising from the sum total of the changes the current administration has made to date.

I still operate on the assumption that Obama et al are not stupid or incompetent: they know exactly what they are doing and any one action may seem incoherent unless seen in the context of the whole. To me, the endgame looks like totalitarianism and I am afraid for our country. I would be delighted to see that assumption disproved, but I am closer to despair each day.

Anyway, I submit the link for your perusal. http://article.nationalreview.com/print/?q=YjdkMzRiZjIxZjliN2E1ZjI5MzkxMGNlMjc2ZGM3YWM= I think it is a key part of the puzzle.

All the best to you. I remain your silent and admiring fan.

Doug

Also a rather equities bearish move in the 10 year today what with the 6 bps decline in yields.

Today was an important reversal day in my view. Last two times we came in and had decisive overnight action confirming the existing trend only to see it reverse into the open and during the day was the Yuan gap open, which marked the start of a 10% decline and the 7/5 drop in futures to 1003, marking the bottom into this spectacular rally.

I continue to grow more fearful by the day. And the more I hear about QE redux and the hope that it could bring the more I realize how few understand the gravity of the situation and the need to read your site.

I’d say it goes lower than 24 for a while, and then spikes again at the 15-16 level. That’s just a pure, wild assed guess though.

It’s what has happened before, however…

If we are still in a cyclical bull market within a secular bear market, this would seem to make sense to me as cyclically the option markets are forecasting lower vol in the near term, but as you have alluded to the long-run dangers seem infinite and thus IV would be higher.