Investing veteran Tom Lee says that the worst of the latest correction in monetary markets has possible already handed.
In a brand new interview on CNBC, the Fundstrat founder says he’s wanting on the volatility index (VIX), a preferred gauge of anticipated volatility in inventory markets.
In keeping with Lee, the VIX means that markets received’t see considerably decrease costs.
“The factor that we’re watching is the VIX spike to 60 on Monday which is the third-highest studying ever, and the VIX futures curve inverted which was the steepest inversion for the reason that pre-pandemic occasions.
Each are beginning to normalize, I believe the VIX, because it closes under 20… And as that VIX futures time period construction uninverts, that tells us the worst of the panic is behind us.
I don’t assume it means we received’t have ripple results as a result of we all know there’s some trapped bulls and there’s nonetheless some nervousness round Iran and the way a lot of this yen carry commerce has to unwind however I believe the worst of the promoting stress is behind us.”
Final week, Lee mentioned that on the opposite aspect of the correction, the present market dip will appear to be a “progress scare,” which describes traders’ concern in regards to the US economic system’s well being.
The investor says that bettering weekly jobless claims may very well be an indicator that confirms a restoration for markets within the close to future.
“Nicely I believe traders, with regards to the expansion scare aspect, have one thing they’ll examine each week, which is weekly jobless claims, as a result of that was a constructive shock on Thursday, and a number of it got here from Texas.
Texas had a giant drop in weekly claims week-over-week. The truth that markets reacted so positively Thursday to that jobless claims numbers places me within the camp that that’s one of many massive drivers as a result of we had a greater than anticipated claims numbers after which the market popped.
I believe the expansion scare is what’s on traders’ minds.”
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