By now, all regular readers should be able to write their own script re: mechanical flows off the back of vol resets, momentum signals and so on.

I’m not going to dwell too terribly long on this today, because i) the gist of it’s straightforward and ii) as predictable as Donald Trump’s “art of the deal” sequencing always looks in hindsight, he retains the capacity to upend everything and render markets untradeable with one “Truth.”

The vol-scaler universe, as well as other systematics, was forced to cut exposure over the past several weeks. Wednesday’s equity rally and accompanying vol crush will compel some re-leveraging, starting with first-mover CTAs.

On Nomura’s estimates, trend followers could add $20 billion of equity longs based on the mid-week surge in global shares and, as the bank’s Charlie McElligott wrote, even a move back into “just a ’20 iVol’ world would see vol target overlays reallocating into equities.”

The figure on the left, above, gives you a sense of what four weeks of war did to combined systematic equity exposure — it came into Wednesday just 10%ile on a multi-year lookback. The figure on the right shows you hypotheticals for target vol under different forwards.

“Mechanical forces in the equities vol market can’t have a view on ceasefire ‘winners’ and ‘losers,'” McElligott reminded investors. They “have to trade” the knock-on effect as downside hedges go OTM and skew flattens.

At least for right now, a big rally in cash equities “will be punitive for macro doomers and over-hedgers bleeding PNL they didn’t have to start with,” as well as for “vol-scaled risk management at funds who’ve been forced” to de-leverage and cut exposure “into what’s now a face-ripper ‘UP,'” he went on.

Of course — and this speaks to what I said both above and first thing Wednesday morning — this is all very tenuous on the geopolitical side. As Charlie put it, we could be right back to “stressing in two weeks’ time.”