"Fearless Markets Are The Ones That Should Be Most Feared..."

Authored by Simon White, Bloomberg macro strategist,

The rapid recovery in stock prices and the fall in volatility after their correction suggests the same type of trades - which contributed to the abruptness of the selloff - are being re-entered.

Stock-index correlation’s wobble in the recent market upset has been brief. It had hit new lows and was a sign that the days of ultra-low volatility were numbered. Dispersion selling – whereby index volatility is sold versus vol on individual stocks – has the effect of driving down correlations.