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  • Market Rebounds on De-Escalatory Headlines; Momentum Recovers After Brutal Yesterday

    The market has seen a broad-based rally to start the month, driven by de-escalatory headlines in the Middle East. With over 400 names in the SPX green on the day, the momentum is recovering after a brutal yesterday that saw a -8% decline (-2.6 sigma move). Today’s reversion is being led by high-beta stocks, which…

  • Market Sentiment Takes a Nosedive as Dealers Short Gamma in Front End

    Market sentiment took a significant hit this week, with dealers shorting gamma in the front end of the options market. This move has been one of the sharpest drops we’ve seen in recent history, with a staggering $7 billion difference between sessions. Our client base is feeling weary about the current state of the market,…

  • Positioning Pain Continues: Momentum Sharply Lower and Crude Higher

    Positioning pain continued today as momentum sharply lower and crude higher (WTI at $105) created a challenging environment for traders. According to GSPRHIMO, the move was one of the worst 1-day moves in nearly 5 years, with the 3-day move approaching -15% (the second-worst since Covid). Memory remained at the epicenter of the long momentum…

  • Weekend News Recap (28 – 29 Mar): Global Tensions Escalate Amid Economic Uncertainties

    This weekend saw a surge in global tensions, as economic uncertainties continue to plague major world powers. The Federal Reserve’s latest moves have sparked speculation that rate cuts may be over, while the ongoing US-Israeli conflict with Iran has reached new heights of escalation. In a surprise move, JPMorgan Chase and Pimco have warned that…

  • The Bearish Conundrum: Slowing Stock Declines and the Weekly Straddle Paradox

    The recent stock market downturn has been a cause for concern for many investors, particularly those who rely on the S&P 500 index as a barometer of the overall health of the US equity market. However, a curious phenomenon has emerged, one that challenges the conventional wisdom surrounding the relationship between stock prices and volatility.…

  • The Short Gamma Conundrum: What It Means for US Equities in the Final Days of February

    As we approach the end of February, investors are facing a unique market dynamic known as “short gamma.” This term refers to a situation where the market is positioned to sell risk as prices decline or buy risk as prices rise, leading to amplified directional moves. Currently, the market is short gamma on the upside,…

  • Global Fundamental Managers Experience Worst Month Since 2022

    March has proven to be a challenging month for global fundamental managers, with the cohort experiencing its worst performance since 2022. According to a recent report by Goldman Sachs Prime Brokerage, fundamental managers are on track to have their worst month since 2022, with a negative return of -5.4% on a monthly basis. This takes…

  • The Real Economic Impact of Tighter Financial Conditions in the Eurozone

    The recent increase in short-end interest rates and the jump in long-term yields have significant implications for the Eurozone economy. While the exact path of the European Central Bank’s (ECB) rate hikes is uncertain, the reality is that financial conditions are already tightening, leading to higher costs for corporations and consumers alike. In Germany, electricity…

  • The Yield Curve’s Stagflationary Shock: Implications for Equities and Options

    As the yield curve continues to shift in a stagflationary direction, market participants are facing renewed challenges in navigating the complex landscape of risk assets. In this blog post, we will delve into the implications of the recent move lower in yields for equities and options, and how dealers are positioning themselves in these markets.…

  • Market Volatility Surges as Investors Brace for Continued Disruption and Risk Reduction

    As the conflict in Ukraine continues to escalate, market volatility has surged, with investors increasingly concerned about sustained disruptions to production and longer-term risks. While part of the recent selloff can be attributed to a Friday effect, with markets closing lower on concern over taking risk over the weekend, there are signs that investors are…