Marko Kolanovic Breaks Down The Selloff, Says Short-Term Bounce Likely (With Caveats)
“The virus should go, but stimulative measures will likely stay”.
“The virus should go, but stimulative measures will likely stay”.
What could bring back September’s shock reversal?
“We caution investors that this bubble will likely collapse.”
“The market currently is not pricing any significant risk”.
“With the onset of the trade war in the first quarter of 2018, the impact of Trump’s policies on markets changed drastically”.
“At the depth of the market selloff last December, we set a controversial S&P 500 price target of 3,100 for 2019”.
“The recent sell-off appears far too small to have material and persistent deleterious effects on equity”.
“Two strategies that in theory should have little to do with each other” have been “nearly 100% correlated” recently.
“Low volatility crowding turned the conventional economics upside down”.
“In less than 48 hours, many major markets lost ~5%”…
“These trades worked well until the rotation started, and now are in the early stages of a collapse”.
“Uncertainty has erased confidence built over a decade”.
“By just looking at the price of the S&P 500 one cannot see the true state of equity markets”.
“The market will likely continue to be dominated by disruptive tweets”.
“Once exposure starts to increase, it tends to continue until”…
“Given all of this – why are we not bearish?”
But beware “miscalculations”.
“The ‘Trump put’ has now evolved into a ‘Trump collar’.
If you have further questions…
If history is any guide, stocks will do well for “up to 30 months”.
“…some of the fears are justified more than others.”
“… the answer to all of these questions lies in market liquidity.”
Of V-shaped bounces and low positioning.
“… at times of high volatility, the VIX is almost the sole driver of market
liquidity.”
The phenomenon is not only real, but in fact pervasive. There are, of course, caveats…
You must be logged in to post a comment.