Bloomberg's Tracy Alloway comments facetiously on this morning's action in equities:
"Overnight we saw mass social unrest, continued culture wars, the prospect of martial law, a curfew in the world's biggest financial center, and the looting of a retail icon. So naturally, futures are up."All facetiousness aside, the above quote pretty much captures the disbelief among investors who've been around the block a few times. Apparently, per Bloomberg yesterday, hedge funds, for example, have by and large sat out this impressive snap-back rally.
While we at PWA haven't sat the rally out -- in fact we've been quite pleased with our core allocation's relative results of late (particularly when we adjust for risk taken) -- we entirely sympathize with the sentiment reflected within the hedge fund community. I.e., the fundamental risk/reward backdrop screams caution right here.
As for those with the stomachs and expertise to actually play the short side (speculating on a market collapse), well, let's just say they've been a steadfast bunch for weeks.
Particularly in the S&P futures pit: