The prospect of renewed Sino-US tensions as the White House seeks retribution for the coronavirus could be "the dreaded 'macro shock-down' catalyst", Nomura's Charlie McElligott writes, in a short Friday note.
In addition to some disappointment around certain aspects of Amazon and Apple's reports, "accelerant (sell) flows" have been triggered, he warns.
The timing leaves something to be desired. We were seemingly on the verge of settling back into a more benign regime with CTAs flipping long in the S&P and dealers' gamma positioning pivoting back into the "safe" (i.e., long) zone, where hedging flows would act to dampen volatility.
Now, it's all back up in the air, thanks in no small part to potential recriminatory behavior from Washington and Beijing.
Citing all of the above, McElligott notes that May began with Spooz off ~135 handles from Thursday's overnight highs, "aided and abetted by the Amazon and Apple's warnings [and] pulled-outlooks".
Where does that leave us? The short answer is in a precarious spot (and you can take "spot" figuratively and literally there). We're one bombastic tweet away from things taking a turn for the unfortunate.
Here's McElligott with t
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