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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                 May 13, 2025                              *

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*                       e-mail: fiendbear@fiendbear.com                     *

*                    web address: http://www.fiendbear.com                  *

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Fiend Commentary

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Complacency Returns: The VIX Whispers While Markets Roar


A graph with lines and numbers

AI-generated content may be incorrect.

 

You wouldn’t know it from the headlines, but the trade war isn’t over. Not even close. And yet, here we are — markets celebrating like it is. The VIX has fallen to 18.53, the lowest level in over a month, even as U.S. Treasury yields rise, the economy sputters, and oil creeps back above $62 a barrel. Risk is rising, but the market doesn’t seem to care.

The short-lived 90-day tariff pause between the U.S. and China has triggered a euphoric response from equities. Wall Street has latched onto the idea that this is a turning point — that lower tariffs signal not only peace but permanence. But this is exactly the kind of short-sighted optimism that has preceded almost every major market misstep in recent memory.

If tariffs were good policy, then stocks should’ve fallen on their suspension. Instead, the rally implies traders never truly believed in tariffs as an economic strategy to begin with. Worse, it suggests they now believe this temporary pause could morph into permanent de-escalation — effectively stripping the U.S. of leverage in any future negotiations.

Meanwhile, the bond market isn’t buying it. Yields are rising in spite of falling inflation and reduced import costs. That’s not a bullish signal — it’s a warning. It reflects fears of uncontrollable debt issuance, geopolitical uncertainty, and a shrinking buyer pool for long-term U.S. debt.

Yet the VIX continues to drop. The so-called 'fear gauge' has gone from panic in early April to complacency in mid-May. It’s behaving like everything is fixed — but the foundation is still cracked.

We’ve seen this movie before. Perfection gets priced in, fear evaporates, and just when everyone’s moved to one side of the boat, the wave hits.

 

 


 

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