It is difficult to tell what is going on today as volumes remain extremely low as many traders have opted to position risk-neutral to start this week, US holiday, and all, according to Stephen Innes, Chief Global Market Strategist at AxiCorp.
Still, there is a palatable maleficence level lingering about SoftBank’s large derivative position amid the recent tech sell-off.
And while there is not a great deal going on due fast money risk neutrality after last week’s “wipeout,” the supposed heft of “one man’s call position” is still not sitting well with many bulls at the moment.
Will this be the other case of this too shall pass? Probably, after all, we have just come from sudden stop economic Armageddon to record stock market highs, so what are a few billion call options to stand in front of a mega-trillion-dollar recovery once the vaccine is in hand.
Still, the usual caveats apply around momentum when it comes to stocks, so investors need to choose their buys wisely.
“I think everyone was on the same side of this trade today, so not a huge amount of follow-through in stock or currency market inter-day highs in Asia after China’s August exports rang in higher than expected.
!China’s August trade balance came at CNY416.6 bn versus CNY386.0 bn consensus; exports +11.6% y/y vs. +12.4% consensus and imports -0.5% y/y vs. +6.1% consensus, both in yuan terms.
“And while China’s export growth has surprised on the upside for several months, the strength mainly came from external demands of medical equipment and other supplies related to work and school from home, which could slow down in future months if the vaccine becomes a reality.
“Although all the headlines were on the rout in US equities, little attention was paid to what was happening in fixed income.
“In some ways, this was understandable, given where all the action was. However, although bonds did rally initially, it was hardly huge given the NASDAQ was down around 6% at one point, but then Yields moved higher after the non-farm payroll (NFP) data.This underlines the fact that last week’s tech rout was equity market-specific rather than any real change in underlying sentiment.”