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Breaking down this sell-off, among the most extreme and rare Wall Street has ever seen
PUBLISHED SUN, MAR 22 202010:12 AM EDT
Michael Santoli

KEY POINTS

Some investors sounded alarms about the Covid-19 outbreak as it hit China, but the brutality of the equity-market sell-off has been so extreme and rare, no one would dare have predicted it in detail.

Trillions of dollars in investment strategies premised on muted volatility, ample demand for corporate credit, an inverse relationship between stock and bond prices and ample liquidity have come unspooled.

Trend-following hedge funds are heavily short this market, which makes sense and remains a source of downside pressure unless and until a major rally or policy move interrupts the adverse feedback loop.

We’re at a point where the market needs to rally soon to interrupt the mechanistic selling spiral.

https://www.cnbc.com/2020/03/22/breaking-down-this-sell-off-among-the-most-extreme-and-rare-wall-street-has-ever-seen.html