Hedge Fund Leverage Plunges Most Since The Financial Crisis
by Tyler Durden
ZeroHedge.com
Mon, 04/16/2018
While it may seem like a lifetime ago, it was only in late January that the market was melting up relentlessly with every trading day, as volatility crashed lower and lower to unsustainable single digit levels, sending the S&P into a buying frenzy. It was, as Morgan Stanley pointed out at the time, “euphoria.”
Of course, it all ended with a bang on February 5, when the VIX exploded from 15 to around 40, crushing the inverse VIX ETF industry overnight and impoverishing countless volatility sellers. Commenting on the dramatic shift in market mood, Morgan Stanley’s Michael Wilson also said that the S&P 500 P/Es peaked in December, the same day as Bitcoin, one day before the tax bill passed…
… and adds that “this peak in valuation was followed in January by a peak in positioning as both institutional and retail investors piled into stocks at rates we haven’t witnessed in years… Back in January when stocks were rising sharply, we heard numerous calls for a “meltup” being made by prognosticators and investors. Of course, that’s how tops are made and we think January marked the top for sentiment, if not prices, for the year.”
He also noted that with volatility now much higher, “a return to those levels of exuberance is very unlikely.”
The Rest…HERE
