Market Overview

Bloomberg: August 2015 Was 'Terrifying,' But August 2016 Is 'Nothing But Calm'

Bloomberg: August 2015 Was 'Terrifying,' But August 2016 Is 'Nothing But Calm'

Monday, August 24, 2015, was a rough day for the U.S. equity market, which shed $1.2 trillion of market value at its worst moments. The S&P 500 index was the closest it has been in recent memory to setting off a market-wide circuit breaker that would have ceased trading for 15 minutes.

One year later, the market has gone from "terrifying" due to China-related fears and an end to aggressive Federal Reserve stimulus. Today, the market is "nothing but calm," at least according to Bloomberg.

A year ago, the Volatility Index, commonly referred to as the "fear index," saw its largest single day surgeon record last year. Today, it is now trading 40 percent below a decade long average and hasn't traded this low since August 1994.

A year ago, many market participants were expecting up to four interest rate hike. Today, the consensus of just one hike before the end of 2017 is mixed.

Related Link: Argus Analysts: Beware August, The Rally Killer

Calm Or Panic Moving Forward?

Bloomberg noted that many market participants are banking on the fact that the bull run will continue in the future. This is based on the fact that hedge funds and large traders tracked by the Commodity Futures Trading Commission haven't been this short on the Volatility Index since 2013.

Bloomberg added that large-cap money managers are more leveraged to the performance of the S&P 500 index today than they have been at any point since 2008. In addition, long-short investors are around 56 percent long — the highest since July 2015.

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