NEW YORK, July 25 (Reuters) – Computer-driven macro hedge fund strategies on Wednesday sold $20 billion in equities and are set to shed at least more $25 billion over the next week after the stock rout, in one of the largest risk-unwinding events in a decade, Morgan Stanley said in commentary to institutional clients on Thursday.
After disappointing earnings reports from Tesla (TSLA.O), opens new tab and Alphabet (GOOGL.O), opens new tab, investors heavily ditched stocks on Wednesday, with the tech-heavy Nasdaq Composite dropping 3.6% in its worst day since October 2022.
“The volatility of the last two weeks started out being very rotational,” said the bank, referring to a recent investors’ rotation to small- from mega caps. “But that has now morphed into a broad index deleveraging (on Wednesday).”
"Extremes like this do not last and often unwind further and faster than the crowd expects."@Callum_Thomas @topdowncharts pic.twitter.com/jOEVBF11a7
— Daily Chartbook (@dailychartbook) July 29, 2024
This topping process is identical to the top in late 2021.
Growth stocks made a new all time high and then imploded. Hedge funds reduced overall exposure, as they are doing right now. They sold their consensus Tech longs and bought their consensus value shorts.
Short covering… pic.twitter.com/qCYCbrTnAd
— Mac10 (@SuburbanDrone) July 29, 2024
Hedge Funds are now the least bullish on gasoline in more than 4 years pic.twitter.com/Jl1FGw8oSY
— Win Smart, CFA (@WinfieldSmart) July 29, 2024
US LABOR MARKET IS RAPIDLY SLOWING:
Long-term unemployment has risen to 1.5 million in June, highest since Feb 2022.
Unemployment rate jumped to 4.1%, highest since Nov 2021.
Job openings declined to 8.1M, lowest since Feb 2021 and leading indicators point to more weakness. pic.twitter.com/TxuhD1TWQy
— Global Markets Investor (@GlobalMktObserv) July 29, 2024
2023 was already the worst year for corporate bankruptcies since the Great Financial Crisis, and 2024 is on pace to exceed last year’s total, per FORTUNE.
— unusual_whales (@unusual_whales) July 29, 2024