This pretty much captures my view. Via Morgan Stanley:
Over the last few weeks we suggested a correction was nigh although we didn’t have a catalyst. Now we do –positioning and leverage should do the rest. While this correction is likely to get worse and feel bad in the short term, this is not a bubble or like 2000 for many reasons.
Correction has arrived, positioning and leverage should do the rest. A combination of peaking rate of change in M1/M2 and aggressive short squeezes has led to a significant degrossing by hedge funds. Markets corrected 3-5% with many of our favored trades taking a much needed and expected hit. This is normal in an exuberant bull market but we don’t think the correction is over until leverage is reduced further by both institutional and retail investors.
