Who’s In The Mood For A Good, Old-Fashioned Momentum, Tech Rout?

More cowbell.

The rather precipitous drop in U.S. equities on Wednesday morning marks a continuation of a trend flagged by Nomura’s Charlie McElligott last week.

Specifically, he noted that the growth shock-led steepening episode seemed to catalyze a ”
“Momentum factor unwind, correspond[ing] with the reversal in the Growth / Value ratio.”

We touched briefly on that again Monday in the course of documenting a spate of negative news for Google.

Fast forward to Wednesday and, amid the dreaded sign “flip” in the equity-rates correlation, you should probably keep yourself apprised of the extent to which the stock selloff continues to exhibit that same unwind in Momentum/Tech/Growth.

The Momentum ETF is having a truly horrible time after narrowly avoiding a third consecutive >1% down day on Monday.

Meanwhile, Growth continues to underperform Value. This is the seventh session out of eight that the Growth ETF has lagged.

As you might expect, FANG+ is having a truly rough go of it, falling the most since March:

(Bloomberg)

The losses there are starting to really pile up:

(Bloomberg)

And finally, note that this is the “wrong” kind of rate rise, as reals and the term premium trade lead bond selloff:

(Bloomberg)

[Side note: The teaser image for this post is an Old Fashioned – I feel like some of my avocado toast/ vodka cranberry Millennial readers might not be familiar]