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What Rough Beast Is This
Updated Sunday, July 23, at 6:30 p.m. ET
With mincing steps, VXX, which tracks short-term S&P volatility, continued its extraordinary descent last week to new record lows. For long-time market observers, the feeling has grown increasingly palpable that “something” has got to give; and yet, on a given day, the broad averages continue to do nothing in particular. They move almost invariably in one direction, wafting ever higher, seemingly unable to sell off for more than a few hours. This is scary and boring at the same time; for in fact, something does have to give. Housing and autos have already peaked, and the disconnect between the stock market and economic reality is growing more troubling by the day. The money managers know this, but their instincts for sidestepping trouble have completely atrophied over the years.
Anyway, we are all in it together up to our eyeballs: pension funds, private equity, insurance companies, individual and sovereign investors — a collective of greater fools, unchastened for too many years to recall what it felt like at the last top.