by Tyler Durden
With global investors desperately searching for a narrative to explain “what changed” as the calendar flipped a page to exuberant September to awful October, we suspect the realization of the fact that global central bank balance sheets are contracting and the world is tightening finally started to dawn on even the most ardent dip-buyer…
Even China’s promise of never-ending support for stocks was unable to support stocks overnight, and as Nomura’s MD of cross-asset strategy notes:
This then looks like general Macro consensual positioning “gross-down” flow, as “Longs” in SPX, Nikkei, Crude and USD are under pressure, while “Shorts” in USTs, ED$, EUR and Gold all squeeze.
Additionally, Charlie McElligott points out that the S&P as the “YTD global Equities safe-haven” theme now too is “cracking”:
After shattering through the 200d MA once again yesterday, S&P futures are now again within reach of the MTD lows (2712) as discretionary tactical longs “tap out” and asset managers continue to sell-down legacy longs (still ~$80B in SPX)
Pointing out that the S&P has big gamma at 2700 strikes (~$3.9B for 10/26 expiry, ~$3.6B for 10/29 expiry) with the largest “pull” remaining at the 2750 strike (~$4.7B / ~$4.0B)