Today's Market-Moving Macro Stories

Before you go, we thought you'd like these...
Before you go close icon

This is a big day for macro events, no doubt about it:

  • The German Constitutional Court has ruled that the European Stability Mechanism, the Eurozone's permanent bailout fund, is legal. A surprise is always possible, of course, but this had probably been priced into the market as a near certainty.
  • The Fed begins its regular two-day policy meeting today. This is more open-ended in terms of outcomes. Will the Fed extend the expected period of low short rates into 2015? Is the bank teeing up another round of quantitative easing (i.e., bond-buying)? Ben Bernanke's Jackson Hole, Wyo., speech was a teaser. Now the market is in "show me" mode.
  • The Dutch go to the polls to elect a new government. The Netherlands is a "core" country in the eurozone, and the latest polls point to a pro-EU coalition emerging as the winner.

Until Bernanke has spoken, we can probably expect the market to remain in a holding pattern. Certainly, the S&P 500 Index (INDEX: ^GSPC) and the Dow (INDEX: ^DJI) have moved in a tight range this morning.

However, beneath the calm, some investors are positioning themselves for increased volatility. Yesterday, options volume on the VIX index (INDEX: ^VIX) -- the so-called "fear index," which tracks market expectations for short-term volatility in the S&P 500 -- hit a single-day record. The previous record was achieved on Aug. 5, 2011 -- the day Standard & Poor's stripped the U.S. of its "AAA" credit rating.


The bottom line: Buy insurance against spikes in volatility or focus on business values and accept short-term volatility as an inevitable hazard on the road to long-term returns.

Speaking of major macro news, check out these stocks that could skyrocket after the 2012 election!

The article Today's Market-Moving Macro Stories originally appeared on Fool.com.

Fool contributorAlex Dumortierholds no position in any company mentioned.Click hereto see his holdings and a short bio; you can follow him@longrunreturns. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners