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Vix update

After a brief Japan-earthquake-tsunami spike, the Vix index has settled back down, and equity markets are breathing a sigh of relief. The equity correction may last a bit longer, but for it to turn nasty would require some new ugly news. Meanwhile, I continue to believe that the market is still priced to a pessimistic view of the world, so that means it has the ability to withstand the occasional bout of nerves or data setback. The fact remains that the economy continues to expand, corporate profits are very strong, monetary policy is nonthreatening, there are plenty of idle resources that can quickly be put to use, and fiscal policy is beginning to reverse the productivity-robbing excesses of the past few years (i.e., if the government can cut back spending this will free up resources that the private sector can deploy more efficiently, thus boosting growth).

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