The Volatility Index (VIX) has risen marginally over the last few years and has proven very capable of spiking to extreme levels very quickly as we witnessed last year over China growth concerns - see chart 1 (Below). However volumes of the majority financial instruments have collapsed over the same period e.g. the volume of shares traded in the US has fallen 23% since the start of the year, the turnover of Treasuries has fallen back close to the depressed GFC levels and the average FX volume has dropped 20% over the last 18 months. Whether the fall off in activity is due to increased regulation since the GFC or investors nervousness with the current market / economies is open for debate but the resulting outcome is not. Lower volumes can be both exciting and dangerous as they lead to increases in short moves for stocks e.g. Fortescue has swung both up, and down, over 20% in a matter of weeks. We cover our current view on the market in this report. (VIEW LINK)