More Volatility Ahead

Apparently there are more senators that are now opposing the confirmation reappointment of Ben Bernanke. The tide seems to be turning on the Fed chairman whose term ends on Jan. 31st. Seems like the politicians are finally paying attention to what many people having been saying all along. No more bailouts!

This is what David Rosenberg had to say:

AS IF WE NEED ANYTHING MORE TO WORRY ABOUT

Greece. Portugal. Ireland. China tightening. Bank bashing. Foreclosures. The housing and mortgage market. Jobs. The Fed’s exit strategy (if it happens). And now we have Ben Bernanke’s confirmation hearings in the Senate and this is not a ‘done deal’. His current term as Fed Chairman ends on January 31 and a vote has been delayed until next week at the earliest – and he needs 60 supporters and a few Democrats have already said publicly that they will not support his reappointment and therefore he will need GOP help. Volatility is still very cheap even after yesterday’s jump.

The last time we had a sudden and unexpected turnover at the Fed was back on June 2, 1987 when Paul Volcker surprisingly announced his resignation. That day, the S&P 500 slipped 0.5%, which was a big deal then since we were in the throes of a major rally, the yield the 10-year note surged 27 basis points, the VIX index jumped 5%, the DXY was crushed 1.2% and gold rallied 1.3%. Keep that in your back pocket just in case.

Time to buy volatility. Bought some VXX for my TFSA this morning.

http://www.nytimes.com/2010/01/23/business/economy/23fed.html