JPMorgan Analyst Sees Quantitative Traders Lashing U.S. Equities
- Marko Kolanovic sees trend-followers adding volatility.
- Quant funds were implicated in selloffs in 2007, 1998.
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Volatility in the U.S. equity market is being whipped up by traders who don’t care what stocks are worth, according to an analyst at JPMorgan Chase & Co.
Selling by “price insensitive” investors employing strategies that take their cue from recent trends in stocks is worsening this week’s swings, according to Marko Kolanovic, a derivatives strategist at the New York-based bank. In particular, he cited forced selling by traders who hold positions known on Wall Street as “short gamma,” a bet that prices won’t move much.