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Morgan Stanley’s James Gorman on Global Economy and Banks

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Part 5
Morgan Stanley’s James Gorman on Global Economy and Banks PART 5 OF 5

Morgan Stanley on Lower Volatility: Harmful to the Market?

Volatility index

The CBOE) Volatility Index (or VIX), which measures the volatility of the S&P 500 index (SPY) (QQQ), rose nearly 13.0% in the past one-month period. The index is also known as the fear index.

Morgan Stanley on Lower Volatility: Harmful to the Market?

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However, volatility has been lower in the past six months as the index fell nearly 3.6%. On May 17, 2017, the VIX rose nearly 46.3%. The huge fluctuation in the VIX in a single day was mainly due to political reasons.

An investigation into Russia’s interference in the US (IWM) presidential election and various reports raising questions about President Donald Trump’s involvement has pulled down the market. When the market falls, volatility immediately rises.

Morgan Stanley on lower volatility

James Gorman, chief executive officer of Morgan Stanley, said that volatility has remained too low in the past six months. He said lower volatility indicates that the market is waiting for something to happen. Any event, either in the US political environment or stabilization in the geopolitical environment, will affect market movement.

Goldman Sachs’s (GS) equity strategist David Kostin said it’s hard to predict whether the current low market volatility is indicating higher risk or more stabilization in today’s geopolitical environment.

For more information, be sure to read Morgan Stanley: S&P 500 Index Could Touch 2,700 in Next Year.

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