Barclays Index Volatility Weekly - Tipping Point
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Barclays Index Volatility Weekly - Tipping Point
Barclays analyst, Maneesh Deshpande, said, "The drop in the S&P500 of 16.8% from its recent peak on July 22 has now exceeded its peak to trough drop of 16% during the summer of 2010. While equity markets subsequently rallied significantly in 2010, the experience after a similar sell-off during 2008 was obviously quite different. Thus risky assets are currently at a tipping point and equally large moves in either direction are possible."
"In our opinion, while risk of a double dip in economic indicators has increased, a relatively healthy corporate sector and underinvested and cautious investor base should provide some floor to equity markets. In our view, the possibility that the European policy makers are behind the curve and may not achieve consensus to respond forcefully to the current crises is probably the most significant risk facing the markets. In the US , with further fiscal stimulus politically unacceptable, the onus is once again on the Fed. However, with inflation expectations still healthy, the bar to initiate a substantial QE3 remains high."
Barclays analyst, Maneesh Deshpande, said, "The drop in the S&P500 of 16.8% from its recent peak on July 22 has now exceeded its peak to trough drop of 16% during the summer of 2010. While equity markets subsequently rallied significantly in 2010, the experience after a similar sell-off during 2008 was obviously quite different. Thus risky assets are currently at a tipping point and equally large moves in either direction are possible."
"In our opinion, while risk of a double dip in economic indicators has increased, a relatively healthy corporate sector and underinvested and cautious investor base should provide some floor to equity markets. In our view, the possibility that the European policy makers are behind the curve and may not achieve consensus to respond forcefully to the current crises is probably the most significant risk facing the markets. In the US , with further fiscal stimulus politically unacceptable, the onus is once again on the Fed. However, with inflation expectations still healthy, the bar to initiate a substantial QE3 remains high."
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