Russell 2000

Authored by Kevin Muir via The Macro Tourist blog,

Think back to earlier this year. At the time, the market was convinced Trump was about to usher in a new wave of free market nirvana. Hedge fund managers piled into small cap equity long positions, confident the pro-growth policies would fuel a massive outperformance for the Russell 2000 index. Here is a chart I ran in my piece “The reality is something in between” which shows the extent of the small cap run:

The start of another week is upon us, which means it is time for choice excerpts from the latest letter to clients by One River Asset Management CIO Eric Peters, who today writes about Brexit, the "new generals" in the market (more in a later post), rising populism in a world of tech "monopolies", modern day robber barons, and much more.

We will have more from today's letter shortly, but for now here is Peters on a topic on everyone's minds, volatility, and what Friday's Nasdaq "air pocket" means:

Beep Beep

 

As the world awaited "Thundering Thursday" and all its potential for panic... this happened in the markets...(NSFW)

A few months ago, a tiny Chinese company (that trades on Nasdaq and is part of the Russell 2000) soared 4,500% and then crashed after Bloomberg reported on the 'surprisingly' strong debut. Well, it's happening again... Wins Finance Holdings has exploded 1000% in the last few days and nobody knows why.

No, this is not a Bitcoin-related entity... The company’s market value later tumbled by billions of dollars after Bloomberg reported in March on the mystery.

The Russell 2000 Index posted a 2.2% decline in May, its worst month since October, and it appears a large swath of investors is now betting it has further to fall.

As Bloomberg notes, hedge funds and other major speculators have a combined net short position of 73,030 contracts in the small-cap index’s futures, according to the latest data from the Commodity Futures Trading Commission.