March like February has been primarily a short covering month, squeezing managers to make purchased they thought they might get a lower prices. Volatility certainly has been subdued despite all the claims at the beginning of the year of powerful ranges for as long as the eye could see. Selling volatility it seems is the only thing to do when the Fed plays such a powerful role supporting equity prices. The VIX once again has proven to be the most useless predictor of volatility and has as much validity as the put/call ratio.
While the correction was scary in January, it did little to correct much of the ratios which indicate overbought values. But equity prices, especially U.S. equity prices, are the place of intervention and provide the most immediate gratification for central banks to influence the real time value of world equity prices. And though the commodity crash of the last eighteen months caught the Fed and central banks by surprise, they have effectively scripted a dollar play to allow then to have the largest economy raise rates while the rest of the world goes to negative rates.
As the world of trading and investment moves toward smart systematic solutions it will be interesting to see if the interventionist maintain the same level of influence. The best algorithms make money no matter what is going on, and that in itself indicates the machines might ultimately drive prices to values, up or down, nearly isolated from a speech or human method of intervention. That is unless they turn off the machines.
