‘Stability Breeds Instability’: ‘Extreme’ Positioning From CTAs, Vol.-Targeters Raises Virus Contagion Risk

"Here is the issue", Nomura's Charlie McElligott wrote Monday morning, as markets grappled with a deluge of unfavorable pandemic news. He then rolled out a phrase that, while timeless, has become even more germane over the last decade, as modern market structure reinforced its explanatory power: "Stability breeds instability", Charlie reminded folks, on the way to describing how another "halcyon" stretch for volatility has precipitated the accumulation of leverage and exposure. "The prior 'sho