Nomura Sees Institutional Derisking Accelerating, Fears “Weaponization Of Stocks” In Trade War

Tuesday, December 18, 2018
By Paul Martin

by Tyler Durden
Tue, 12/18/2018

It’s ugly out there.

While the headlines suggest things are dicey with all the major US equity indices in the red year-to-date, and in correction; under the surface things are going from worse to worserer…

Forced VaR-down,

retail outflows,

and institutional pile-ons,

early Oct / Nov fund redemptions building into tax-loss selling into YE,

pension fund de-risking into a hiking-cycle (buying USTs / STRIPS vs selling Equities as they achieve funding ratios),

systematic trend funds again turning ‘short,’ very negative (~1st %ile) SPX index option greeks for both negative Delta- and Gamma-,

resumption of the buyback blackout window (already started for banks, transports and household goods),

slowing global growth…

…against shrinking G3 central bank balance sheets and net / net “tighter” financial conditions…

and all into a Fed this week which due to enormous “dovish” expectations built-in has a risk of disappointing the markets with a more “hawkish” tone that has to remain somewhat “neutral” despite the “balance-of-risks” shifting to the downside.

The Rest…HERE

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