Nomura’s McElligott: ‘It’s Getting Hot’, But ‘Perpetually Easy’ Fin Conditions ‘Keeps Train Rolling’
The proximate cause is no secret.
The proximate cause is no secret.
“This VERY ‘Long Gamma’ dynamic continues to act as a market shock-absorber”.
And don’t forget about the gamma pin. And buybacks.
“Is this event enough of a macro catalyst to trigger a larger deleveraging”?
Recapping key talking points….
“As a contrarian, consensual group-think views into the year-ahead are often exaggerated”.
So, is there any risk? Well, yes.
“The market has [a lot of] protection which will get sold”.
Dry kindling, meet struck match.
“Intraday movement is squelched”.
“I view the world from the lens of volatility.”
“The easy money has been made”.
The longer we linger ‘up here’…
Trade optimism is running rampant and crowded positioning looks set to unwind.
“Short-term ‘contrarian’ positioning signals be damned”.
“Many believe Trump will keep at least one more ‘negative trade surprise’ in his pocket”.
“This would drive mechanical selling flows from what has been one of the largest ‘gross $ exposure’ positions in the model all year”.
“[We] should see some entertaining price action today!”
Daisy chains, knock-ons and seasonals amid the macro melee.
“The ‘partial’ trade deal story was floated into the ether last week” to an underwhelming market “meh”.
“In less than 48 hours, many major markets lost ~5%”…
Some folks were “triggered”.
Dry kindling waiting for a match.
Mind the post-crisis “muscle memory” for the majority of equities investors.
“Instead, the balance sheet discussion is suddenly a ‘NOW’ thing”.
“The TRILLION DOLLAR QUESTION today is this”…
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