No quiet times

With everything that’s happening in the world in terms of trade, and specifically in the U.S. with the debt and deficits, it looks remarkable to see that the S&P500 is still close to all time highs. The chart below shows how cheap bonds are using z-scores, and how expensive equities are. But the interesting perspective, is that bonds during the 80’s reached a reading of -3, and today we’re “only” at -1. We can still see movements to more extreme readings, and we will be within historical range. And it’s not only the levels, but the path we follow to get there. The VIX and the MOVE Indexes have normalized after liberation day where they had significant spikes, but remain elevated when compared to average quiet periods. Because we’re not in a quiet period. It would appear that we’re waiting for something big to unfold as this administration continues to poke the (trade) bears through Tariffs and comments to sit at the table.

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