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Behind The Scenes Of America’s Post-Election Stock Melt-Up
The S&P was 5700 and change on October 31. It's nearly 6100 now. Not too bad for five weeks' work.
What happened? Well, a US election for one thing, and the restoration to power of a "business-friendly" president. That stirred up the "animal spirits."
Lest we should forget in our daily quest to explain market moves by way of "vibes," there are actual flows behind the melt-up, and no one's better at documenting those flows than Nomura's Charlie McElligott.
Headed into the election, Charlie
Wait a minute. Isn’t the rally due to hopes for deregulation and a further cut to corporate tax rates effective in 2026?
Maybe the hopes result in the flows?
“[The] resumption of heady VRP flows [is] filling-in dealers with massive long gamma, which then insulates markets from large swings while funds are forced to reallocate into policy visibility, further enabling a constructive and grinding equities rally, boosted by the invisible hand of vol control-buying, as said gamma stuffing compresses realized vol and creates a mechanical bid under the market into year-end,”
Yep, those are all words. And I even understood some of them!
H-Man, this has been a good trade and it still has legs. The dynamite is options on leveraged ETF’s.