Fuck Fashion. Markets are Crashin’
It seems Hillary’s pneumonia has spread to global markets
It all started with a note by market guru Marko Kolanovic last Wednesday, in which he warned that the period of market calm is coming to an end, and volatility was about to surge, which in a reflexive fashion would lead to accelerated selling by quant, systematic and risk-parity funds as a result of near-record leverage. The recent market calm and complacency during the summer can be attributed to “relatively stable macro data and a seasonal decline in trading activity” and “a significant driver of volatility’s near-term decline has been derivatives hedging effects, also known as pinning”, according to global Wall Street talking heads, as well as the near all-time high leverage for Volatility Targeting and Risk Parity strategies. However, “this is all about to change as a number of important catalysts materialize this month (ECB, BOJ, Fed meetings), seasonals push market volatility higher, and leverage in systematic strategies and option positioning provide fuel for volatility.” In other words, get ready for extreme angst, because markets are about to tumble hard as fuck. As traders get back to their desks this lugubrious Monday morning, global selling appears to be accelerating and as Bloomberg notes, “a selloff in fixed income is starting to snowball into a global market rout” driven by what Reuters dubbed “growing concerns that global central banks’ commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning.” Check out the gross graphs below…
More interesting (and scary!) perspectives here.