The trade war between the United States and China has lasted for more than one year — and a resolution is nowhere in sight.World Economyread more
The Fed is expected to cut rates Wednesday, but it is unlikely to tell markets what they want to hear on future rate cuts.Market Insiderread more
Pelosi said Trump should not have tried to address China's trade practices in a way that opened Americans up to financial pain.Politicsread more
Investors await the Fed's latest decision on monetary policy, set to be released on Wednesday stateside. The U.S. central bank is widely expected to cut rates by 25 basis...Asia Marketsread more
TransferWise posted an annual net profit of £10.3 million on revenues of £179 million.Technologyread more
Live the high life with a night's stay at Highclere Castle, the iconic stately home made famous by Downton Abbey.Spendread more
Large banking institutions face the risk of failure if interest rates in Europe continue to stay negative, warns the global chief economist of the Economist Intelligence Unit.Banksread more
The fallout from two fatal crashes of Boeing 737 Max planes has ensnared the manufacturer's most-loyal customer: Southwest Airlines. The carrier has canceled thousands of...Airlinesread more
Brent crude oil jumped the most in history in the previous session after attacks on Saudi's oil industry disrupted the kingdom's production.Marketsread more
In the survey, conducted after the third in the Democratic Party's series of debate, the former vice president draws 31% compared to 25% for the Massachusetts senator. At 14%,...2020 Electionsread more
Stocks rose slightly on Tuesday, but gains were capped as the Federal Reserve kicked off a two-day monetary policy meeting.US Marketsread more
The volatility storm that has rocked the market could be just getting started if historical trends hold up.
Products that track market volatility took focus as the market endured its first meaningful pullback in two years. Exchange-traded products that bet against market tumult have gotten shellacked and some even have liquidated.
Seeing such behavior in February, though, isn't consistent with market patterns over the past few decades, according to DataTrek Research. The firm, in fact, found that the most popular fear gauge on Wall Street, CBOE's VIX volatility index, has only peaked once in February since its 1990 inception.
"U.S. equity market volatility is deeply informed by seasonality," DataTrek founder Nick Colas said in his daily note Wednesday.
The VIX spiked past 46 during a whipsaw trading day Tuesday before closing around 37. While many investors likely are hoping that the dizzying movements are the worst of the year, the calendar doesn't back that up.
That's because the measure has peaked for the year in February only once during its existence — interestingly, the only other time was during the market's early 2016 upset.
Most of the other peaks have been concentrated around August and October, which have 36 percent of the annual highs. Adding January brings that total to 50 percent.
In 2018, that trend is particularly notable because of the November midterm elections. Republicans will be fighting to fend off what could be a formidable challenge from Democrats looking to capitalize on a different type of volatility — the political type, which has seen President Donald Trump's approval rating hover around the 40 percent range.
"August of this year will coincide with the peak of the campaigning around midterm elections in the U.S. It will also be enough time to see the true effects of the recently passed tax reform package on consumer spending and business investment," Colas wrote. "And it is also a typical month for peak volatility."
So while the VIX tumbled off its peak Wednesday and moved closer to its long-term average near 20, history argues that there's more volatility to come. That's bad news for the exchange-traded products that bet against volatility, such as the ProShares Short VIX Short-Term Futures and the VelocityShares Daily Inverse VIX Short-Term ETN.
Both products use leverage to play against volatility and have raised concerns this week over the effect exotic exchange-traded products could have on market stability.
Investors, then, would do well to keep the early-year churn in mind and position accordingly.
"Our central investment theme is that the narrative around U.S. equities has shifted from simple (higher earnings and stable rates) to complex (the effects of tax reform on inflation and interest rates, the direction of the dollar, and uncertainties over stock valuation)," Colas wrote. "Higher volatility is a natural extension of this shift."
WATCH: The short-volatility trade was just one aspect of the recent sell-off.