Perhaps it’s the calm before the economic storm
The Standard & Poor’s 500 index slumped 8.6 percent in June, its worst monthly showing since September 2002, when it dropped 11 percent. But the so-called “fear gauge” remained relatively calm, an indication to some analysts that more declines are yet to come.
The VIX index tracks volatility and tends to spike during times of turmoil. It ended the month at 23.95, which indicates a calmer market than Jan. 22, when the VIX jumped as high as 37.57.
“It must be the efficiency of our market, or everyone has decided to take an early summer holiday at home,” says Howard Silverblatt, S&P senior index analyst.
Global markets lost $3 trillion in June, as stocks cascaded on inflation worries. Only three of 52 global stock markets tracked by S&P rose during June: Argentina, Jordan and the Czech Republic.
U.S. popular again.
U.S. stock funds attracted $7.52 billion from investors during May, the second straight month of inflows. It’s the first time that’s happened since March and April of 2007, according to Tobias Levkovich, strategist for Citi Investment Research.
More inflows could be in store. Investors often pick mutual funds partly on their five-year performance records, Levkovich says. Those figures now often look better than they did a year ago, as the downturn of 2002 is no longer included. Domestic funds have been in the shadow of international funds, which have been drawing big dollars amid the rise of emerging markets.
Inflated inflation.
Rising gasoline and food prices have Americans more worried about inflation, which is running slightly above 4 percent. In Zimbabwe, government figures show prices rose 165,000 percent in February.
Private estimates are even higher. “Tragically, Zimbabwe’s inflation rate is not a typo,” John Ryding and Conrad DeQuadros, economists with RDQ Economics, write in a note. The country is suffering amid a shortage of food and basic goods.
Other countries contending with high inflation — though only in the double digits — are Turkey (30.2 percent), Venezuela (30 percent) and Vietnam (26.8 percent).
The Associated Press
