On the last day of a historic week for global markets, there’s little sign of an end to the volatility that roiled bonds and currencies and sent stocks to their steepest plunge since the depths of the global financial crisis.

Mounting concerns that the coronavirus pandemic will spark a worldwide recession fueled a fresh round of selling in Asia on Friday. The slide triggered trading halts in Thailand, South Korea and Indonesia, while Japanese equities sank as much as 10%. Some policy makers rushed to limit wild fluctuations in currencies and sovereign debt. But then, things turned around, with assets from Australian equities to gold seeing gains. By 8:20 a.m. in New York, S&P 500 futures were up more than 5%.

Here’s what strategists and investors are saying about the market fluctuations:

Coming to a Head
“This is all coming to a head very rapidly,” said Brian Barish, chief investment officer in Denver at Cambiar Investors LLC, which manages about $14 billion. “Markets are making it loud and clear that a business-as-usual approach is untenable. We are buying cosmetics and booze and select industrial businesses with pretty durable forms of demand. We have not developed the courage as of yet to jump on airlines or hotels. But maybe getting close with those.”

“At this point, no sane investor should be concerned with 2020 earnings - they are cooked! - but with getting through to the other side of this.”

‘Too Late’ for Hedges...
“It’s simply too late to engage in new long volatility hedge strategies,” said Peter Cecchini, global chief market strategist at Cantor Fitzgerald LP. “Equity markets tend not to move in a straight line. We’d be monetizing hedges aggressively. Both the volatility surface and index technical setups suggest this action is prudent.”

“All the factors we look at are extreme and point to a near-term bounce, including spot VIX at the highest since 2008. We still maintain a sell-the-rally mindset, as fair value on the S&P remains roughly 2,450 on a base case but with significant risk to a downside overshoot.”

...So Try This
“While there is no free lunch, investors are seeking cost mitigation as hedges become more and more expensive,” said Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets.

Selling a call spread while buying a put spread “still allows investors to retain upside should we get a sharp reversal (e.g. we have found a Coronavirus cure); meanwhile, it provides a wide expanse of protection on the downside.”

Dangerous Times
“The toxic fallout from the coronavirus pandemic’s bursting of the Fed’s ‘everything bubble’ has collided with the grotesquely over-leveraged and vulnerable U.S. corporate sector -- this puts equity markets in an even more vulnerable position,” said Albert Edwards, a strategist at Societe Generale SA known for his bearish views.

First « 1 2 3 » Next