The controversial financial product known as XIV is shouldering a lot of the blame for the recent flash crash that saw the Dow slump more than 6% in a span of six minutes. Dave Mazza, Head of ETF Investment Strategy at OppenheimerFunds, was with us to break down the theory that volatility-based products fueled the market meltdown.
The XIV is meant to produce the opposite returns of the volatility index, which spiked 118% Monday. Mazza explained that 2017 was a great year for stocks with record-low volatility. Due to this low volatility, many investors were feasting on these financial products, looking to benefit from volatility going lower. When the exact opposite happened, those investors dealt with the consequences.
"A lot of people like to point the finger at computerized trading for sharp movements in stocks," said Mazza. He said it's only one piece of the story. Mazza highlighted that fundamentals are important to watch and there are many variables that influence stock movement.
Applied Aerospace & Defense CEO Trip Ferguson discusses the company's IPO, defense spending, space innovation, and the future of U.S. aerospace manufacturing.
David Fahrenthold, investigative reporter for The New York Times, examines rising costs, contracts, and transparency concerns in Trump's D.C. projects.
Amy Sullivan, President of Bed Bath & Beyond, joins us to discuss the brand’s comeback, its Container Store partnership and the future of home shopping.
