Morgan Stanley says stock rotation turned in deleveraging, eye US$45bn to sell

Reuters with the report, citing a Morgan Stanley said in commentary to institutional clients on Thursday:

• Computer-driven macro
  hedge fund strategies on Wednesday sold $20 billion in equities
• set to shed at least more $25 billion over the next week
• one of the largest risk-unwinding
  events in a decade
• “The volatility of the last two weeks started out being very
  rotational,”
• “But that has now morphed
  into a broad index deleveraging (on Wednesday).”
• If volatility persists in the coming days, the sell-off
  would rapidly increase
• An additional 1% day-drop in
  global equities could spark sales of $35 billion and macro hedge
  funds could dump up to $110 billion in a 3% day fall

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Keep your eye on JPY, the carry trade deleveraging is a huge driver. 152 now the the level to watch:

This article was written by Eamonn Sheridan at www.forexlive.com.