Markets stocks volatility

Nomura’s McElligott Talks Possible ‘October Surprise,’ Near-Term Outlook Following Tech Rout

It may look like value is suddenly en vogue in September with laggards like the Russell 2000 poised for their best relative performance versus the Nasdaq 100 in years, but the reality might be more mundane or, if that's not quite right, call it "mechanical". "The last few days... look pretty 'gross-down-ish'", Nomura's Charlie McElligott writes, in a Friday note, adding that from a risk management perspective, "books trad[ing] through VaR limits" on the heels of this month's tumult "need to be reduced". Given that, McElligott says that what "optically looks like a 'Value over Growth' trade is really about the mechanical realities of partially reducing your longs and covering a portion of your shorts". Read more: September Tech Correction Turns World Upside Down As far as the dynamics discussed here earlier this month, one-month realized leapfrogged three-month as the tech swoon developed. "The switch we anticipated from Vol Control moving from the 3m- to 1m- realized as their allocation input has been a critical shift in flows", McElligott says. In essence, this short-circuited a friendly latent buying impulse. Recently, the vol-control universe has served as a drag, mecha
Subscribe or log in to read the rest of this content.

10 comments on “Nomura’s McElligott Talks Possible ‘October Surprise,’ Near-Term Outlook Following Tech Rout

  1. joesailboat says:

    Virus numbers are set to escalate come Nov. which will surprise many so congress may hit panic mode and fiscal at election may happen. We do have the old buget to pass also…..sooner.

    • runamok says:

      Numbers are starting their ascent in Europe, a region, as we knoiw, that is well ahead of the U.S. with regard to pandemic timeframes. Europe rates today are the U.S. in 30 to 60 days. I agree it could be a panic moment in the U.S. Capitol Building. Then again, they don’t care enough about the scarring currently happening in the economy, so not if more deaths and illness will inspire them.

  2. Flaaron says:

    Don’t forget the possible China retaliation variable.
    Watching VIX closely.

    • Tom says:

      I expect a relatively muted response from the Chinese government. We are so close to the election that the Chinese will likely wait to see the outcome before deciding on a long to medium term course.

      As an aside, though not a conspiracy theorist by nature, I would not be entirely surprised if an “understanding” between Trump and Xi has been in place for some time now.

  3. John Banjo says:

    This year I’m expecting several October surprises. With Trump I would not rule out daily October surprises.
    Cosmos help us … For one the author of the Anonymous Op Ed from a year ago is expected to reveal himself – my two cents is on Dan Coates, btw.

Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Skip to toolbar