S&P 500 Performance After Volatility Spikes
1: On Friday the S&P 500 experienced one of its biggest 1-day volatility spikes, as measured by the VIX index. (VIX is the implied volatility priced into S&P 500 option contracts.) The table below shows how the market performed after similar volatility spikes in the past.
2: Currently, most of the world’s semiconductors are produced in Asia. This dependence is both an economic and security risk. To mitigate this risk, America is bringing semiconductor production back onshore. The chart below shows the expected growth in capital spending by region, with the Americas experiencing the fastest rise in investment.
3: Go east? It appears many people are leaving California for Texas. The table below shows that it is 5-8x more expensive to rent a U-Haul truck one way to Texas from California than in the other direction.
4: Residential investment as a share of GDP in Canada is double that in the US. In fact, Canada’s residential investment as a share of GDP is 4 percentage points higher than the peak during the US housing bubble.
Economic dependence on housing is a big concern because housing is so intertwined with many parts of the economy - construction, durable goods, banking - and the wealth effect from rising property prices promotes broad-based consumer spending.
Looking at the US experience, after the real estate bubble burst it took years for housing prices to bottom. This slow decline dragged down most of the economy with it making economic recovery extremely challenging.