Cumberland's Kotok Sees 'Return to Normal' in U.S. Markets

The video discusses the current state of market volatility amidst geopolitical risks, noting that despite expectations, volatility has not surged significantly. It explores the impact of prolonged low interest rates on market perceptions and the return to normalcy with more frequent market swings. The discussion also covers bond market anomalies, using O'Hare Airport bonds as an example, highlighting investment opportunities in the current market environment.

What is the current state of the VIX in relation to geopolitical risks?

• The VIX is at its lowest point ever.

• The VIX is irrelevant to geopolitical risks.

• The VIX is above 20 but not as high as in February.

• The VIX is at an all-time high.

Why are people not hedging more despite the low volatility of the VIX?

• They believe volatility will remain low forever.

• They are unaware of the VIX.

• They are focused on other financial instruments.

• They expect interest rates to drop further.

How have zero interest rates over the past decade affected market perceptions?

• They have made 2% cash an insignificant asset class.

• They have distorted market perceptions, making 2% cash significant.

• They have had no impact on market perceptions.

• They have led to a decrease in market volatility.

What is the significance of 2% cash in the current market?

• It is irrelevant to current market conditions.

• It is a temporary trend.

• It is a sign of market instability.

• It is considered a new asset class.

What anomaly is highlighted in the bond market example involving O'Hare Airport?

• The bond is not insured by Assured Guaranty.

• The bond yield is higher than the U.S. Treasury yield despite being tax-free.

• The bond is not affected by market volatility.

• The bond yield is lower than the U.S. Treasury yield.