MS Cross Asset: It’s too early to ‘buy the dip’ in equities and credit, the risk/reward in selling some equity vol and fading term structures is now favorable

Kolanovic: 3 reasons why this can squeeze higher
1. No communism…..As of only a few days ago, Sanders appeared highly likely to secure the nomination (e.g. odds plunged from 65% to 16% now). We think yesterday’s results are likely not fully priced in the market

2. Rate cuts outlive COVID………A possible scenario is that the COVID-19 e…[Read more]

G7 Ministers: We are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase.

Mislav Matejka, head of strategy at JPM and a leading voice of the long term bull is slightly changing message:
1. relief bounce is likely given heavily oversold conditions, but markets to remain under pressure for longer…
2. now believe that stocks will remain under pressure for longer.
3. Expect an imminent relief bounce–
4. markets will s…[Read more]

Positioning for Equity L/S hedge funds
1. Gross leverage decreased -4.4 pts – the largest week/week decline in more than two years – to 169.5% (22nd percentile one-year)

2. Nets increased +0.2 pts to 48.6% (95th percentile).

Institutions sold a very large $39bn of US equity, close to 4x std-dev and the biggest weekly $-size on record and broadly consistent with other big risk-off periods ($37bn during the biggest week in Oct-18, $32bn in Aug-15 and $25bn in Mar-18