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The Low VIX Hides Fierce Undercurrents
Goldman Sachs’ volatility desk made the following comment:
“With the VIX back to its lowest levels in more than a month, our Vol desk is focused on hedging opportunities as 1-month S&P implied correlation is near its lowest level in 20 years.”
Simply, a low VIX can convey a sense of market calm on the surface, yet implied correlation tells a different story.
The VIX, based on option trading data, measures the implied volatility of the S&P 500 index.
A low VIX means traders expect the market to be relatively calm with not much volatility.
Conversely, a higher VIX reflects expectations for high levels of volatility.
Today, the VIX is relatively low with a 16 handle today, as S&P 500 index option trades appear complacent.
Implied correlation measures how much S&P 500 stocks are expected to move together.
When implied correlation is high, as it was during COVID, the 2022 interest rate shock, and more recently at the beginning of the Iran conflict, macro forces dominate trading activity, and stocks tend to go up or down together.
When correlation is low, stocks decouple. Individual company fundamentals, technical setups, and momentum chasing drive returns.
As we see in the chart below, the implied correlation is at a 20-year low.
The low VIX implies smooth sailing ahead, while a record-low implied correlation suggests the market could be at risk.
Goldman is hedging the risk of a correction, i.e., an implied correlation spike.
Often, when implied correlation rises sharply from extreme lows, as it did in August 2024 during the yen carry trade unwind, the divergences that kept the index calm disappear.
Stocks start moving together again, and most of the time they move down.
This condition is not a warning to expect a market downdraft, but it does suggest that risk awareness is critical.
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NYC Tower Owner Prepares To Rebuild 15 Floors After I-Beam Failure
Fears of a possible collapse at a condo tower under construction near Grand Central Terminal had abated by the end of the week, but the incident only signals the massive engineering challenges tied to Manhattan's office-to-apartment conversion boom.
The former Pfizer headquarters at 235 East 42nd Street, being converted by David Werner and Nathan Berman's Metro Loft Management into more than 1,600 residential units, has become a high-profile example of the risks of repurposing aging office towers into housing at scale to achieve socialist NYC Mayor Zohran Mamdani's strategy to address the metro area's housing shortage.
Engineer: “The concrete beams in our residential conversion of the Pfizer Building are buckling. The building could collapse! Did you correctly account for the weight of the additional floors we added?”
ChatGPT: “You’re absolutely right! I see the issue now—in using the Euler… pic.twitter.com/Wh3pABw84f
Metro Loft CEO Nathan Berman told Bloomberg in an interview that 15 stories were added to part of the building, and that two columns beneath were insufficiently reinforced, leading to a failure that caused some of the 15 cantilevered floors above to sag.
Via Bloomberg
Berman said Metro Loft now plans to replace the facade, slabs, and steel on those floors: "We are prepared to rebuild that portion of the building."
"It will be reskinned, everything will be leveled, fixed in place, and it will be brand new," he said.
Tuesday morning's column failure prompted evaluations of the building and surrounding structures, as well as street closures for fear the building would collapse. Since then, crews have been working to install temporary supports.
New York City's Department of Buildings has released a new image showing the emergency works to stablise the 37-storey tower at 235 East 42nd Street after structural beams were seen buckling on its 21st floor.
In a statement, the Department said: "Crews working through the night… pic.twitter.com/R1U5su2h2r
James LaFave, a professor of civil engineering at the University of Illinois Urbana-Champaign, told the outlet, "Engineers rationally overestimate what they think the loads would be, underestimate how strong they think elements would be to simplify it, and therefore you would end up with a substantial margin of safety."
LaFave noted, "For something to have caused the level of buckling seen in that column there, it's not some small perturbation from expectation that would make that happen. It's something substantial."
Tyler Durden Thu, 07/09/2026 - 12:00