A long history of the VIX, as presented by BNP, shows that spikes are related to specific market events. These events are often related to recessions, but they often occur with market-related events that do not translate to recessions.
It is also clear that events associated with VIX spikes and lead to market declines are associated with high equity valuations. If the market is overextended, then it will see a greater decline.
We have seen a large market event with the current Trump trade wars, but right now, the market has offset the Liberation Day declines. That does not mean the market is ready to retrace all its losses, but there seems to be optimism that did not exist a month ago.
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