A second market sell-off could be “Lehman-like”

Nomura is making a technical case for a sell-off but not many see a fundamental case for a return to the financial crisis. However, former Treasury Secretary Larry Summers said Tuesday the ongoing trade dispute between the U.S. and China is potentially creating “the most dangerous financial moment” since the global crash at the end of the last decade.

The market plunge could arrive as soon as late August, Nomura predicted, as trend-following algo traders still have many bullish trades to unwind.

“We would expect any near-term rally to be no more than a head fake, and think that any such rally would be best treated as an opportunity to sell in preparation for the second wave of volatility that we expect will arrive in late August or early September,” Takada said. “We would add here that the second wave may well hit harder than the first, like an aftershock that eclipses the initial earthquake.”

Source:

CNBC, Yun Li, 2019-08-06, “Nomura: A second market sell-off could be ‘Lehman-like'”