The $VIX is making a bold move, aiming for its fourth consecutive green day. This doesn’t happen often, folks. In fact, it’s only occurred once in the past 17 months—back in mid-July 2024, when the VIX put together a five-day winning streak. We all remember what followed: that disastrous -8% $SPX swoosh, courtesy of Yenmaggedon.
Are we heading for another wild ride? I’m not saying we’ll see the same chaos again, but this streak doesn’t come without reason. If history is any guide, these green days usually precede something big. And with $VIX call demand spiking, some big questions are hanging in the air.
On the horizon, the Bank of Canada is warning that U.S. tariffs could ignite the worst crash since 1992, setting the stage for a brutal two-plus-year recession. The VIX calls are stacking up. So, what’s the play here?
Pick your poison. The market’s a mess right now, and there are several ways it could all unravel. The first option? Japan’s bank run combined with that pesky yen carry trade and rate differential. We’ve seen this before, and it could send shockwaves through global markets. Then there’s the spike in jobless claims and unemployment. Rising unemployment always spells trouble for the broader economy. And finally, don’t forget about the potential government shutdown on March 14.
Meanwhile, the yen keeps ticking up, Japanese producer inflation is soaring at +4.2%, just above expectations, and the market is getting uneasy. Will Japan hike rates again, triggering that reverse carry trade we’ve all been watching? Or is there something else brewing that no one’s seeing coming?
All of this puts the VIX in the spotlight—and investors are paying close attention. The demand for portfolio protection is nearing its highest point since September 2023. The risk is out there, and the market is starting to price it in. So, as the $VIX charges forward, keep your eyes open. The next move could be massive.
Sources:
https://finance.yahoo.com/quote/%5EVIX/
https://www.blogto.com/city/2025/02/bank-canada-warns-us-tariffs/
https://x.com/DarioCpx/status/1894201147508101345
