DJIA down 602.39 (-2.33%) at 25,224.04
S&P 500 down 66.00 (2.37%) at 2,724.37
From ZeroHedge:
Oops, wrong ZH headline. Let's try again:
Here Is What Triggered Today's Sudden Stock Liquidation
Earlier this morning, Nomura's Charlie McElligott noted something which in retrospect was quite prophetic: the cross-asset strategist highlighted that his Risk Parity model showed that the market's most important strategy is in "de-risking" mode as the economic cycle turns sharply:
In a positioning confirmation / “nod” then to this growth- and inflation- slowdown scenario, it is finally worth noting that we see our Risk Parity model having added enormous notional size in global Government Bonds (USTs and JGBs) over the past month, against very large selling of global Equities and Credit.The implication, and confirmation judging by today's market, is that the trade was a long way from finished, looking at the recent risk parity deleveraging in equities...
... offset by buying of gov't bonds.
But while ongoing (relatively slow) risk parity deleveraging may explain the pressure on the market over the past month, the reason for the sharp waterfall in US stocks just after 12pm ET...
... has to do with another systematic "trader" type in the market: namely the much faster CTAs....MORE
As McElligott writes in a follow-up note, he notes that Nomura's CTA Trend model "is again deleveraging massive notional in long US Equities expressions across SPX, RTY and NDX live."...
The soybeans reference is to a couple Sunday posts after the G20 news but before yesterday's big gap open:
Sunday, Dec. 2
Yuan Surges In Early Trading, Signals 2800 Open For The S&P
We cautiously caution, be cautious.
The real action in equities, and probable all time highs for the indices will come in the first quarter of 2019....
Sunday, Dec. 2Trade Talks: Grains and Beans
More chance of an extended move here, over the next few weeks, here than in equities, see after the jump....
Beans up another 5.25 cents at 911.00:
