This is a big day for macro events, no doubt about it:
- The German Constitutional Court has ruled that the European Stability Mechanism, the Eurozone's permanent bailout fund, is legal. A surprise is always possible, of course, but this had probably been priced into the market as a near certainty.
- The Fed begins its regular two-day policy meeting today. This is more open-ended in terms of outcomes. Will the Fed extend the expected period of low short rates into 2015? Is the bank teeing up another round of quantitative easing (i.e., bond-buying)? Ben Bernanke's Jackson Hole, Wyo., speech was a teaser. Now the market is in "show me" mode.
- The Dutch go to the polls to elect a new government. The Netherlands is a "core" country in the eurozone, and the latest polls point to a pro-EU coalition emerging as the winner.
Until Bernanke has spoken, we can probably expect the market to remain in a holding pattern. Certainly, the S&P 500 Index
However, beneath the calm, some investors are positioning themselves for increased volatility. Yesterday, options volume on the VIX index
The bottom line: Buy insurance against spikes in volatility or focus on business values and accept short-term volatility as an inevitable hazard on the road to long-term returns.
Speaking of major macro news, check out these stocks that could skyrocket after the 2012 election!