After 40+ days of the S&P going virtually nowhere on muted volume, cross-asset correlations soaring to all time highs, and quant funds leveraging to record levels, it all just snapped on Friday the “volatility on the sidelines” finally made a grand entrance right back into the market, which tumbled the most since Brexit, and closed below its 2015 highs.
And now the question is whether this violent selloff, the fouth such elevator drop lower in the past two years, is over or if it will continue. While there have been several conflicting viewpoints, here we present the opinion of Goldman’s David Kostin, according to whom the selling is only just starting.
To be sure, not even Goldman is willing to go out on a limb as warning a crash is imminent, which is why it prefaces its forecast by saying that “strategically, we expect modest appreciation in the…
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