Volatility

Between tariff negotiations, war headlines, and interest rate chatter it’s hard to avoid tape bombs when navigating the markets of late. Naturally, we thought volatility would have to be elevated, but wanted to look at it from a historical perspective, and what we found was rather surprising.

Over the lifespan of the VIX Index the average level is 19.47

During the first Trump term we were surprised to find that the average was lower than the overall average.

A full point lower, 18.25 vs 19.47, and that includes the pandemic. If we were to back that out, using the subjective start date as February 28, 2020, for the start of Covid, its materially lower.

14.53, or a solid 25% below the lifetime average.

Following the first Trump term, the Biden administration term averaged 19.34, or more in line with the lifetime average.

What’s the point of all these averages, well maybe just maybe, despite the pomp and circumstance of all the posturing, we are in for a lower volatility environment for the next 3 years?

At least the math suggests that.

A tangential point surrounding the VIX for the month of July is its seasonality. Over the last 10 years, July, on average, is the second largest monthly drawdown at -7.75. We should expect the volatility environment to increase over the next 3 months, according to history.

Stock Ownership

JPM noted recently that they are concerned with the elevated level of investor positioning in the US.

As noted above, US households are close to record levels of equities on their balance sheets.

But if we consider the following chart there may be cause for concern about how they are doing it.

source: https://x.com/Barchart/status/1943185652708761806 

And not to throw gasoline on this fire but check out “what” they seem to be buying as well.

A potent cocktail no doubt.

Healthcare Employment

There was an interesting article on Bloomberg discussing Mental Health jobs in the US.

https://blinks.bloomberg.com/news/stories/SXDXMYT0G1KW “Mental health providers, the fastest-growing industry in the US since the start of the pandemic, risk a sharp reversal of fortune as President Donald Trump seeks to eliminate billions of dollars in funding that enabled their expansion.”

We have mentioned the contribution of Education and Healthcare to the Non-Farm Payroll previously but thought it might be worthwhile to revisit it, especially during the Biden administration.

Prior to 2022, Healthcare jobs were a negligible contributor to the NFP, since that time the percentage has safely hovered around 50%.

The chart below shows what % of the total NFP number is the Healthcare contribution.

Is it possible there should be concern around this level of contribution continuing post the cuts?

“The proposed cuts include revoking more than $11 billion for addiction and mental health care and $1 billion for mental health services in schools, according to the text.”

“Employment in the mental health industry has grown at a rapid pace since 2020, thanks in part to federal grants funding training programs to expand and improve the workforce. At the start of the pandemic, there were about 123,400 on payrolls in offices of mental health practitioners, according to the BLS. That number has since more than doubled to approximately 273,000.”

In addition to the above concern, we note the following observation surrounding JOLTS.

Job openings are falling. Unemployment is flat.

The 2020–2025 labor market setup is starting to rhyme with 2007, when JOLTS rolled over quietly, and the unemployment rate held steady… until it didn’t. Not a perfect correlation yet, but one H2 investors can’t ignore.

Electricity Generation If anyone traffics on X, aka old Twitter, it’s hard not come across posts from the owner, Elon. Considering some of his business interests, it’s easy to understand why he is so pro new forms of electricity generation.

And that leads of course to his disappointment in the passage of the Big Beautiful Bill, because of the cuts to future capacity.

According to the NY Times, he may have a valid point when it comes to our future needs and safety.

According to this comparison from the NY Times, China is racing ahead to be the high-tech exporter of 21^st century power technologies, while the US is doubling down on being a petro-state exporting the technologies of the 19^th century.

https://nytimes.com/interactive/2025/06/30/climate/china-clean-energy-power.html


Some random charts


Political bias at the Federal Reserve?

For anybody that is subjected to tv commercials, this chart is totally intuitive.

Scary, nonetheless.

Stock Market Capitalization.

The US stock market has a market capitalization of $63.8T, which is more than the other markets listed below combined at $61.6T

Have a great weekend!

Best,

Meraki trading team