Stories by Zhiwei Ren
By Zhiwei Ren | October 5, 2017
In the last two years, there has been an impressive rally in industrial metals. From the lows during early 2016 until today, copper is up 50%, zinc is up 100%, aluminum is up 50%, and lithium is up 120%. When industrial metals rallied, stocks in the metal and mining sector rallied sharply as well.
By Zhiwei Ren | August 10, 2017
Low volatility has been the hallmark for this year’s market. We have seen the lowest level on record for the volatility index (VIX) and the lowest realized volatility in the S&P 500 Index. The reason we have such low volatility in the market is clear: The macro environment is very benign and investors know it.
By Zhiwei Ren | April 20, 2017
The equity market has been very quiet so far in 2017. Year-to-date, the S&P 500 has posted a daily decline greater than 1% only once (on March 21), and the realized volatility for S&P 500 has reached the lowest point in the last 50 years.
The backdrop for the low volatility is widely recognized: the U.S. economy is growing a little above trend, a new pro-growth president was elected, inflation is rising but still remains low, the risk for a hard landing in China is lower, Europe and Japan are growing at the fastest pace post-crisis, and most importantly, low inflation allows the Federal Reserve (Fed) to intervene whenever we have some volatility in the market.
By Zhiwei Ren | February 23, 2017
The first two months of 2016 were challenging times. Global risk assets, especially commodities, were in a free fall and the market was pricing in a global recession and possible hard landing in China. Compared to 2016, the 2017 financial market is having a great start, with all major risk assets performing well year-to-date. The S&P 500 Index has not seen a 1% drop in over 90 trading days, and 3-month realized volatility has not been this low since 1995.
By Zhiwei Ren | December 22, 2016
This week’s chart shows the history of global trades as a percentage of gross domestic product (GDP). In the last few years, global trade has stagnated. Now, with political populism gaining ground in major countries, it is likely globalization has peaked at this cycle, which will effect asset pricing and the broader economy.