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Wall Street Bloodletting Pauses. But Don’t Call It Stability
I wouldn't call it "calm." "Stability" would be a misnomer too. But the bleeding stopped for risk assets on Tuesday. Temporarily, at least.
In all likelihood, market participants took a shot at selling outlandishly rich vols, which apparently means at least some folks were in fact "able to get the risk budget to do the trade in a size that matters," as Nomura's Charlie McElligott put it earlier this week, while wondering aloud if the scope of the just-witnessed VaR shock might limit traders' ab
A relevant bit of ancient history: the ferocious snap-back rally a week ago Wednesday faded rather quickly.
The all-important VIX also bounced back late in the session as shares gave back some of their gains.
But who knows? “Please sit back, relax and enjoy the ride.”
H-Man, I agree that while the bleeding has stopped while everyone re-balances, economic bad news will drive the next leg down, That may be a better test of whether this market will find a soft landing.
Look at everything the market has had thrown at it. Underwhelming Mega Tech reports. Weak NFP and ISM Mfg data. Sahm Rule triggered. Yen carry trade implosion.
Actually, only the last one is dramatic. The others are negative but hardly decisive, and really shouldn’t have grown men on their knees, wailing and begging for an emergency 50 bp handout.
Still, it’s a bunch of hits, all in a week, and the S&P 500 is down . . . about 8% from ATH. Hmm, from all those wailers and beggars and their racket, you’d think it was down 25%.