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Hello, and welcome back to the Five Charts of Christmas. Now can the calm continue? We're showing you the VIX Index of US equity market volatility going back to when it started in 1990. And you can see that on this measure, 2017 was the calmest year on record. Indeed, if we'd looked at how much the stock market itself had varied, you would find that this is the calmest year all the way back to 1964, despite all the angst there's been in the political world.
Now you can explain this in terms of the fundamentals. We've had positive surprises on growth from Asia and Europe, while America has continued to grow. But there's also an explanation from straightforward speculation on the markets. A lot of people are betting on low volatility, particularly through ETFs. That implies that when volatility does finally begin to rise, people could get hurt by that. And that is a problem, because it's very hard to see how volatility can possibly be as low in 2018 as it has been this year in 2017.