►VIX, volatility and ETFs/ETNs:
Vix and More blog: “While I was out of pocket for a few days, Barclays had the temerity to launch a new VIX ETN. Not only that, but this new volatility product is the first inverse VIX ETN to hit the market. It goes by the formal name of Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN and has a ticker of XXV.”
► Tail Risk Talk (HT: Mebane Faber):
Pimco Sells Black Swan Protection as Wall Street Markets Fear and Is it possible to hedge tail risk?
Economic Security at Risk—Findings From the Economic Security Index:
“Even before the current recession, economic security was a major concern of most Americans. This concern has only grown amid the deepest downturn in decades.”
►What Can The Fed Do?
Bruce Bartlett: “This week, Federal Reserve Board chairman Ben Bernanke testified before Congress that the Fed is prepared to take additional actions to stimulate the economy in the event that growth falters. Unfortunately, the Fed does not yet appear to be considering an end to its ill-advised policy of paying interest on excess reserves at banks, which is in effect a subsidy to them for not lending.”
►Revisiting Global Small Caps
MSCIBarra: “Global small-cap-stock investing gained significant attention after the bursting of the technology bubble in early 2000. After a considerable run-up in the early and mid 2000s, global small caps underwent severe stress during the recent financial crisis. Since the easing of credit markets, the small-cap segment has rebounded. More importantly, relative to international large- and mid-cap stocks, small caps still exhibit distinct characteristics that may provide opportunities for portfolio diversification and active management. Passive investors looking to track small-cap indices can employ optimization techniques to build tracking portfolios, with reasonable tracking error and transaction costs, that overcome the challenge of the high number of index constituents.”
►A toxic toolkit
Greg Ip (The Economist/Free Exchange blog): “Asked Wednesday what he’d do if the economy needed more stimulus, Ben Bernanke was noncommittal: ‘We are going to continue to monitor the economy closely and continue to evaluate the alternatives that we have.'”
The Battle: How the Fight between Free Enterprise and Big Government Will Shape America’s Future
The Rational Optimist: How Prosperity Evolves
The Great Reflation: How Investors Can Profit From the New World of Money