Credit Suisse's Xu: Investors Hedging Modest Pullback, Not a Crash

The video discusses recent market trends, highlighting a lack of demand for hedges despite a 10% SNP pullback. It explores the role of leverage in the market, particularly in the tech sector, and the shift towards more modest protection buying. The discussion also covers hedging strategies in response to inflation risks and the breakdown of equity-bond correlations. Finally, it examines asset allocation strategies, emphasizing the role of commodities in diversifying portfolios during high inflation periods.

What was the initial market reaction to the 10% pullback in the S&P in January?

• A surge in tech stock prices

• Volatility underperformed due to lack of hedges

• A decrease in market volatility

• A significant increase in demand for hedges

What factor contributed to the recent increase in demand for hedges?

• Geopolitical tensions and Fed speculation

• A decrease in interest rates

• A rise in tech stock prices

• A decline in inflation rates

How did January's market conditions affect hedge funds, particularly in the tech sector?

• They increased their reliance on fixed income

• They saw a decrease in leverage

• They faced a painful period

• They experienced significant gains

What is a notable trend in hedging strategies during high inflation regimes?

• A breakdown in the correlation between equities and bonds

• A decrease in commodity allocations

• A focus on tech stocks

• Increased reliance on fixed income

What shift have institutional investors made in their hedging strategies?

• Increased reliance on bonds

• Complete withdrawal from the market

• Focus on equity-specific hedges and commodities

• Reduction in tech stock holdings