One of the most stunning facts about the investment climate is the unusually low volatility throughout the capital markets. The reason that is increasingly worrisome, not just because trading profits of the major banks suffer or that hedge funds find it difficult to make money. The reason is that low volatility is seen as a harbinger of doom. As the NY Fed's Dudley put it recently, "Volatility is markets right now is very low. I am nervous that people are taking too much comfort in this low volatility period, and a consequence of that, taking bigger risks." It may seem ironic that Dudley expressed concern about ... (full story)