The hottest Trump trade of them all just set a new record

The hottest Trump trade of them all just set a new record
The hottest Trump trade of them all just set a new record

In Washington, volatility is running at highs not seen in years. On Wall Street, volatility is running at lows not seen — ever.

The stock market is on a 48-day run of not having moving up or down more than 1 percent in any single session, something that rarely happens and is all the more remarkable considering the political commotion since President Donald Trump took office nearly four weeks ago. The level of realized volatility is the lowest in records going back to 1962.

In terms of intraday price movements, the S&P 500 has never started a year with a tighter range than it has seen since 2017 began, according to analysts at Sandler O'Neill. Stocks have been on a gradual but steady move higher, with the index gaining just shy of 10 percent since the controversial Republican took over.

Such market complacency normally would be a matter of concern.

A market that shows little or no reaction to outside noise gets increasingly susceptible to a downturn should something meaningfully jolting come along.

But in this case, the mellow mood on Wall Street appears to be a reflection that the market and the economy have hit a sweet spot that has divorced itself from the political chaos, and the lack of volatility is justified.

Rather than serve as a contrarian signal that a reckoning is on the horizon, the low volatility readings are "a false warning," said Art Hogan, chief market strategist at Wunderlich Securities.

"The market seems to want to focus on what could be the positives," he said. "If we get a pro-growth agenda and move forward, the market is (focusing on) that a whole lot more than the market's worried about a constitutional crisis in the Mike Flynn fiasco."


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