Fed's Risk Management Underpins the Market, Curnutt Says

The video discusses the VIX, a measure of market volatility, and its historical context. It explores the concept of market dislocation, particularly the dislocation between the S&P and PMI indices. The discussion then shifts to expectations for market volatility in 2019, considering factors like macro risks and Fed policy. Finally, the video analyzes the European economy, focusing on German bonds and the ECB's monetary policy.

What does a VIX level above 30 typically indicate about the S&P 500's daily movement?

• The S&P 500 is stable with no movement.

• The S&P 500 is moving less than 1% a day.

• The S&P 500 is moving more than 5% a day.

• The S&P 500 is moving around 2% a day.

How does the financialization of the VIX affect the market?

• It reduces market volatility.

• It creates feedback loops that can influence market behavior.

• It stabilizes the S&P 500.

• It has no impact on market dynamics.

What was the main cause of the market dislocation observed in December?

• A sudden increase in interest rates.

• A mismatch between asset prices and economic metrics.

• A major geopolitical event.

• A significant drop in oil prices.

What is the relationship between the S&P 500 and the Purchasing Manager Index (PMI)?

• They are not correlated.

• They are positively correlated.

• They are negatively correlated.

• They are inversely correlated.

What is one factor that could potentially increase market volatility in 2019?

• Stable corporate profits.

• A peaceful resolution to Brexit.

• A decrease in global trade tensions.

• Uncertainty in the European economy.

What role does the Federal Reserve's risk management play in the market?

• It only affects the bond market.

• It has no impact on the market.

• It stabilizes the market by reducing uncertainty.

• It increases market volatility.

Why are German bonds attractive even at low or negative rates?

• They are considered a safe haven during economic slowdowns.

• They offer high returns.

• They are not influenced by ECB policies.

• They have high liquidity.