People tend to believe that the same narratives will come back, but those trades are rare. Risk parity ran huge risk exposure going into corona, but those risks have been washed out. Note the relative small reaction by the RPAR ETF during the last move lower in Spuz.

During the move lower, gamma (whales) was the new buzzword, and it looks people are still looking for "gamma" to drive the market as a narrative, but that trade died quickly as well...

Their relative earnings revisions vs market would support a catch-up rally (vs market)

1. Yale's 'Crash Confidence' survey shows individuals are more worried about a stock market crash now than in early '09

2. AAII bears > bulls now a record 31 straight weeks

3. We just saw the third largest weekly outflow from US equity funds, *ever*

Elon: "Ehhh....I....I mean....to be totally frank.....I´m no.....I mean I think.......lets see how the debates go....."

Real yields continue to drive many assets, Spuz included. The question is whether or not Spuz started "front running" the real yield roll over or not?

Zombie banks anyone?

Latest via El Pais, "Government intervention of Madrid looms as regional administration refuses to implement stricter coronavirus measures" worth a read on the corona chaos in Spain and Madrid. Linkhere.

Note the depressed levels of traffic in Madrid.

Elections kink obviously still there, but given the past days' px action in equities, people will probably start looking at relatively elevated equity vols still...

Uncertainty killer...

Many of the risks we sold off on during September right now feel like they have shifted to a mix of "already priced in" and actual potential positive catalyst / opportunity

1. Lack of fiscal stimulus: now in every sell-side model AND october deal now seems somewhat possible (based on newsflow the w/e)

2. low likelihood of more QE in the near term: priced in

3. Consensus positioning: switched quickly from "max long" to somewhat de-risked

4. Rebalance activity: switched from selling to buying

5. Election risk: sentiment shifting to focus on that stocks normally trade up post elections

Only worry is that there is no wall of worry...?

Nordea pulls out their great "what is good for Trump is good for the USD" chart again.

Another accurate USD trading signal...and it occurred when the crowd wasmax short the USD.

Looks like the Euro, despite the latest sell off, still trades a bit too euphoric...

Eur vs SX7E.

As Nordea writes;

"the billions that Mnuchin had pre-funded for the autumn stimulus package will be stuck at the US Treasury general account at the Fed instead of ending up in the real economy - at least until after the election."

The lack of fiscal clarity will not make Fed´s job easy during the coming month. Chasing the USD here is a little late for the short term, but the chart below explains the USD dynamics well. Fed is not out printing the Treasury, which is what you need for a weaker USD...

Daily Admissions to Hospital since Feb 23, 2020 for EU4

GS: "More ECB QE in December"

As we have said recently, Europe is facing a long cold winter, especially South Europe.