Calm before the storm…and confusion?

Let’s see: Asia equities are solidly up (Nikkei up 4%!); Europe equities down solidly (around 1% down for most indices); US futures flat.  What to make of it?

With volatility remaining high, it seems expectation are for another leg down in equity markets.  Maybe the European markets are reflecting that now, with the US markets to come.  The Asia markets?  Maybe idiosyncratic stuff (e.g. Japan’s rumour of pension buying equities).  In any case, I generally agree with Mr El-Erian on this one: more turbulence is likely.  With the volatility futures curve still in backwardation, we’ve a little while to go before it’s all over.

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