Here’s how contagion from volatility derivatives transmits to the equity markets.
Donald Luskin, chief investment officer at TrendMacro, offers a simpler reason why stocks eventually stop going down. “It halts once the algos and investors run out of stuff to sell,” he said, adding that a rebound gives investors “hope ... and that starts the healing.”
Stocks got cheaper because they got riskier, and risker because they got cheaper. That’s all?
Overdue and inevitable. The animal spirits driving the bond back-up is all good for stocks.