Convexity

Gundlach: "You Should Be Raising Cash Literally Today"

"Volatility is a trade that's made a lot of money and its very very crowded, which suggests to me the days of low volatility are numbered. If you're a trader or a speculator I think you should be raising cash today literally today. If you're an investor you can easily sit through a seasonally weak period."

RBC Is "Astounded" By The Magnitude Of This Rotation

This is "classic 'shorts outperforming your longs' stuff," notes RBC's head of cross-asset strategy Charlie McElligott, as he warns Friday's VaR-shock is a worst-case scenario against a backdrop where post-financial-crisis highs in 'net' and 'gross' exposures are currently deployed by the majority of equity hedge funds. However, he does offer a silver-lining for stock dip-buyers (and what to watch for).

RBC: Welcome To "The Insanity Loop"

"It's a classic 'pennies in front of a stream-roller' / 'negative skew' return profile - a Taleb distribution...The problem is….IT KEEPS WORKING, because market expectations for rates / curves / inflation expectations remain D.O.A., which perversely keeps the major global central banks 'reflexively easy'..."

Bill Blain: "What's Going On In Equity Markets Should Serve As Something Of A Warning"

Most of the recent gains have been concentrated in a very small number of the mega-cap tech stocks – Apple, Google, Facebook and Amazon. Despite the absence of any real selling pressure (yet!), the rest of stocks are struggling to keep up the momentum. A handful of mega-cap stocks are masking underlying weakness. Near 1/3 of the rest of the SPX are in bear phase.

Financial Market Insurance Is Not Like Hurricane Insurance

"..the hurricane is not more or less likely to hit because more hurricane insurance has been written. In the financial markets this is not true. The more people write financial insurance, the more likely it is that a disaster will happen, because the people who know you have sold the insurance can make it happen. So you have to monitor what other people are doing.”

RBC Explains Today's Rush To BTFD

"the missile strikes change NONE of the calculus for me...Thus, the balance of risk remains in favor of upside for now until this muscle memory above (buy risk dips, sell vol) is changed... The near-to-medium-term ‘risk downside’ story to me remains largely about the rates move as ‘reflation’ has broken trend line..."