The last few weeks of 2011 saw things quiet down a bit in global markets, and you might think that investors are done panicking about all the stuff that worried them throughout the year.
You’d be wrong.
A couple of charts from Nomura strategist Ian Scott demonstrate that nicely
The first shows the equity risk premium — basically the gap between global equity earnings yields vs. the global, GDP-weighted yield on 10-year bonds. As you can see, the gap remains extraordinarily high, despite the VIX having come way off old highs.
Another interesting measure of panic is Nomura’s cross-border equity selling. Cross border equity selling picks up steam when people are freaked out, and we remain at levels that have only been exceeded once, and that was around the Lehman collapse.
Some other measures, such as the relative valuation of high vs. low-risk stocks also points to sentiment and fear that’s associated with panic levels.
So lest you worry that everyone’s dropped their guard, fear not.