What I think has been going on in the markets:
1. Hedge Funds got hurt in October by bad tech earnings and started to de-lever net and gross exposure
2. Some of the smartest multi-strat players like Millennium and Citadel had their worst months in a while in November
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1. Hedge Funds got hurt in October by bad tech earnings and started to de-lever net and gross exposure
2. Some of the smartest multi-strat players like Millennium and Citadel had their worst months in a while in November
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3. Bullish positions in #oil came under pressure after expectations of Iranian supply leaving the market were disappointed
4. Under pressure from Kashoggi affair, Saudis had little autonomy to support the oil market
5. A number of large commodity funds went into tailspin
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4. Under pressure from Kashoggi affair, Saudis had little autonomy to support the oil market
5. A number of large commodity funds went into tailspin
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6. November chop in commodities and equities forced large parts of HF community to shut down for the rest of the year
7. As large parts of HF community closed their books and de-risked, liquidity in the markets deteriorated
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7. As large parts of HF community closed their books and de-risked, liquidity in the markets deteriorated
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8. Free fall in oil prices had a domino effect on credit, bringing liquidity in that market to a halt
9. Lower oil prices likely forced MidEast SWF to start selling equities as a way to fill the budget holes of respective governments ( a la Q1 2016 )
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9. Lower oil prices likely forced MidEast SWF to start selling equities as a way to fill the budget holes of respective governments ( a la Q1 2016 )
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10. End of the year retail outflows exacerbated by deteriorating sentiment and poor liquidity put further pressure on the markets
11. CTAs have pyramided their short positions as buyer strike from hedge funds and pressure from retail flows made it into an easy trade
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11. CTAs have pyramided their short positions as buyer strike from hedge funds and pressure from retail flows made it into an easy trade
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12. It’s likely that long/short + other equity related HF community accounting for roughly $2trn in assets will open for business again with the turn of the calendar
13. There is also up to $100bn of demand for equities for months down rebalancing by pensions as per MS
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13. There is also up to $100bn of demand for equities for months down rebalancing by pensions as per MS
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14. Overall, the near term liquidity from hedge funds and pensions is likely to generate a tradable bottom in the near term
15. However, until oil prices stabilize and able to sustain even a modest but durable recovery we are likely to be stuck in this quasi-deflationary market
15. However, until oil prices stabilize and able to sustain even a modest but durable recovery we are likely to be stuck in this quasi-deflationary market
16. This is a lot more about the confluence of liquidity, positioning, seasonal, geopolitical and performance factors than it is about the Fed or Washington, though clearly the latter aren’t helping the extremely poor sentiment
