Complacency in the market

The theme this year has been so far the lack of volatility in the market place. The VIX has traded down to 19 mo lows and is breaking inter-day lows consistently. Does this mean the coast is clear and we have nothing else to worry about? With a new global economy, I don’t think so! There are Dubai like crisis potentials all over the place. Who is currently holding back that they are on the brink of severe loss or overnight shut down, whether it be a company or country. This newly phrased term so commonly used in markets today such as cautiously optimistic are being utilized by major players suggests to me that the artificially inflated markets have room to move downward. What will happen once Big Government bailouts start retreating out? The crutch we have now are not permanent implants. This administration is also set on overseeing innovation and free markets, which limit profits. The steep yield curve right now will have to start coming back which means lesser profits for lenders, and higher rates in the future. If we think demand for lending is limited now, wait till rates start heading upward, then again profits are affected. My opinion is VIX is not pricing in these factors, and we have become way too complacent.