Vols on the run

Vols are continuing on their tear today. While the VIX is up modestly to 16.5, vols across individual equities feel like they do when the VIX is spiking into the 20's. The financial are once again leading the charge. Anything with a hint of sub-prime exposure is seeing volatility pumped even higher from their already lofty levels.

A year ago, it was interest rates that had the market's attention. Before that, it was the spike in commodity prices, copper in particular. The previous September (2005), it was Katrina and the impact on energies. These mini-panics come on, ricochet around the echo chamber for a few weeks or months, driving up volatility to irrational levels, and then peter out.

If I had to predict, the current sub-prime mania will bubble along until August when the market goes on vacation. Hopefully, the echo chamber will move on to some new hissy fit when everyone comes back.