Volatility in losers not yet at 2008 levels

As disturbing as the moves are in European bank stocks, it’s not 2008 again. At least not yet. Charlie Morris is back from the Continent. We looked at some of his models on the Bloomberg terminal this morning. What would you have seen if you were there?

The crash in momentum has not yet begun in earnest. For that to be the case – and for the losers to outperform the winners – you’ll need to see much higher volatility in the losers. Loser volatility spiked in 2008. We’re nowhere near those levels now. Charlie’s keeping track of them for The Fleet Street Letter readers.

But as he pointed out, volatility can spike in a few days. All it really takes is an external event. Something no one expected, or no one expected quite so soon. The most likely candidates?

Bankruptcies and sovereign bond defaults go to the top of the list. That’s what you get in a world with too much debt and too little growth. But don’t rule out war, terrorism, and acts of God or Nature’s God.

Category: Market updates

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