Tariffs, volatility, and a storm of headlines—yet the markets barely flinch. Scott Bauer joins us to unpack whether Wall Street’s grown immune to chaos, or if the real shock is still to come.
Summary – IBKR Podcasts Ep. 255
The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.
Jeff Praissman
Hi everyone. I’m Jeff Praissman for the Interactive Brokers Podcast. It’s my pleasure. Welcome back. Scott Bauer, Prosper Trading. Hey, Scott, how are you?
Scott Bauer
I am good, Jeff. How are you?
Jeff Praissman
I’m great, I’m great. And this Wednesday morning, coming live from the floor, we have another one of our five-minute market podcasts. I’m excited to have you on.
Scott, it’s another week, another wild ride in the market. We hit the seven-day low on April 30th, rallied at the end of the week. Then we held steady Monday, opened lower yesterday, and this morning we’re looking up again. Is the market getting used to, for lack of a better description, the shock and awe of tariff headlines?
Scott Bauer
There’s no question it is, and that is no more relevant than watching and looking at how the VIX is trading.
If we would have this news flow that we’re having right now—if this was three weeks ago, five weeks ago—we probably would’ve seen the VIX back in the mid to upper thirties, maybe even higher. And now we’re seeing it down in the low to mid twenties, which still, historically, is elevated.
But yes, what that tells you is—and it’s human nature, and that’s one of those psychological things about trading, Jeff, that you know—is once more and more of the same situation happens, we become numb to it, and the market does as well. And that kind of concerns me a little bit here.
Jeff Praissman
Was just gonna ask you about volatility, especially not only the past week—’cause like you said, a month ago this would’ve been 45, 50. Are we headed back to 14 and 12 over the next five days?
Scott Bauer
Yeah, I don’t see the VIX going lower than 20 anytime soon, and I’m using that more or less as an arbitrary number. But there are just still so many geopolitical, tariff headlines, economic, macroeconomic issues that are out there that support the market moving—the S&Ps moving—1.5 to 2% a day.
A VIX that baseline—a VIX of 16—is really the equivalent of about a 1% move in the S&Ps daily. So if we use that as a baseline, 32 would be a 2%. We’re sitting right in the middle of that right now, and that’s the trade that’s going on right now.
And I just don’t see that really slowing down or easing, just because of the constant headlines.
Jeff Praissman
And switch gears a little bit because we are at the tail end of earnings season. And historically, the earnings season brings movements for several reasons—especially fundamental reasons. But from what you’ve heard and what you’ve seen, have companies come to grips with this new normal on tariff uncertainty? Are they still wavering and not sure what’s going on? Because they have to make important decisions as well, based on—
Scott Bauer
Absolutely. I think it’s a combination. If you’ve read through many of the reports, yes, there’s a lot of concern. Some actually have raised guidance. Some have said, “We don’t know what the impact is gonna be.” And some, like an Apple or even a Ford, have come out and said, “Okay, this is the number it’s going to be.”
But again, I think the market—especially the retail sector—has become accustomed to that now.
So I do think that moving forward, the cloud, the shadow that’s over some of this guidance—I don’t think that’s going away. We’ve just become used to it.
But honestly, Jeff, when I look at earnings as a whole right now, I think they were far superior to what the lowered expectations were. Much better than what many economists, analysts would’ve thought they would’ve been.
And if it weren’t for the tariff overhang, I think the market could really take a nice leg higher.
Jeff Praissman
Yeah, it is crazy to think, right? With everything that’s going on, we could just be right back into a rally at some point again with all the uncertainty.
Scott, this has been great. Thanks again for coming by.
For our listeners, you can find more from Scott on our website under the Education tab from a podcast and webinars. Also go to his site, ProsperTrading.com, for Prosper Trading Academy. Scott, thanks so much, and looking forward to having you on the show again.
Scott Bauer
Look forward to it. Thanks so much, Jeff.
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