Oops! There Goes Complacency

 

Well, that didn’t last long, did it?

Just last week investors didn’t have a care in the world, despite what in retrospect was a gathering storm around President Trump’s firing of FBI Director James Comey.

The CBOE Volatility index (VIX), dubbed Wall Street’s fear index but which I call its complacency index, didn’t move up much from its 24-year low of 9.77 last Monday. “So, if the Comey Affair doesn’t matter to markets—yet—what does?” I wrote.

That “yet” should have been in capital letters, because after the blockbuster report in The New York Times that Comey had a memo saying the president had asked him to end the FBI’s investigation of ties between Russia and the Trump campaign, markets were gripped by a mini-panic.

On Wednesday, the Dow Jones Industrial Average plunged 372 points, the Standard & Poor’s 500 index slid 1.8%, and the VIX spiked 50% in a single day, to close at 15.59. That  same evening, Deputy Attorney General Rod Rosenstein named former FBI Director Robert Mueller special counsel for the Russia investigation.

That’s calmed jittery markets (the VIX was trading near 12 Friday), but was it really back to normal again?

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