Before the U.S. stock market opened on Wednesday, Charlie McElligott, a cross-asset strategist at Nomura Securities, released a research report stating that the U.S. stock market had achieved a "critical stabilization" from the "left-tail risk repricing/growth panic" of the previous two weeks, and market sentiment had shifted from panic to relief.

What triggered this change were two consecutive catalysts: the explosive revenue figures disclosed in the Anthropic prospectus ( S-1 ), and the performance of SK Hynix far exceeding expectations. McElligott wrote in a research report that this represented a widespread sense of relief at the collective psychological level of the "risk market and AI trading" after several significant days.

At the same time, there was a large order for bullish options worth approximately $1.6 billion by the "Big Seven" ( Mag7 ) in the market, and the implied volatility on NASDAQ significantly decreased. The S&P 500 index was just 1% away from its historical high. However, about 100 hedge fund managers resigned during this period of turmoil. McElligott characterized this as a structural "cleaning" of a multi-strategy approach and also warned that it might only be a matter of time before the next round of stop-loss exits occurs.

This research report was written before the market opened on Wednesday, at a time when Alphabet and Microsoft had not yet released their financial reports, and the Federal Reserve's interest rate decision had not been made public either.

Anthropic S -1: AI Commercial "Proof of Concept" Implemented

McElligott believes that the release of Anthropic's prospectus 'has done a lot of work in rebuilding local confidence in the AI narrative' – previously, in September, the annualized recurring revenue (ARR) data caused the market to question AI's profitability and financing model, and for a time led IPO investors to lower their valuation to $1.5 trillion.

According to Nomura, citing S-1 data: Anthropic's revenue soared from $386 million in 2024 and $4.6 billion in 2025 to $16.3 billion in the first half of 2026, with the second quarter of 2026 alone reaching $11.6 billion, a year-on-year increase of about 15 times; consumption volume increased by 13 times, and subscription volume increased by 18 times.

McElligott particularly highlights two data points that he believes will most substantially drive the “proof of concept” for AI.

• Firstly, Anthropic achieved positive operating profits in the second quarter of 2026.
• Secondly, the revenue efficiency per unit of computing power has significantly increased. He directly cited data to illustrate: "In the second quarter of 2025, a year ago, for every $1 spent on computing power/infrastructure, Anthropic could generate $0.57 in revenue... According to S-1, in the second quarter of 2026, for every $1 spent on computing power/infrastructure, it is now capable of generating $2.08 in revenue."

In other words, the revenue generated by the computing power of Anthropic has more than tripled within a year. McElligott also notes that the next key milestone will be the release of the October ARR update data next week, setting a benchmark expectation of around $78 billion, and points out that "if this figure can indicate an expected total of around $100 billion by the end of the year, subsequent positive economic effects will follow."

SK Hynix "Sold Until 2029": AI The demand for storage remains endless

The second catalyst comes from the performance of SK Hynix. McElligott indicates that this financial report shows that the demand in AI's storage supply chain is still strong, with no signs of slowing down – 'sold out until 2029'

According to data cited by Nomura, SK Hynix' revenue increased by 328% year-on-year, operating profit by 632% year-on-year, and net profit by 216% year-on-year. The company also announced a substantial share repurchase and dividend plan, which led to a 11% surge in the stock price on that day.

McElligott also pointed out that the market's ability to digest large-scale financing transactions is also an important support for the restoration of confidence in this round. He mentioned the successful implementation of the first batch of Meta stock issuances (he expects the final supply to be "as high as $98 billion"), as well as Broadcom's $63 billion chip agreement with Anthropic, and the $40 billion equipment finance lease between SpaceX and Apollo. He concluded that "real money" is "enthusiastically undertaking large-scale debt transactions."

"Whale" Returns: A Large Order of $1.6 Billion in Bull Call Options Emerges Mag7

As sentiment turned positive, funds seeking to catch up on gains also entered the market. McElligott (citing data from Nomura Mike Lamon) noted in a research report the "large-scale upward volatility buying" that occurred on Monday and Tuesday:

• Apple ( AAPL ): Purchased 70,000 call options that expire in January next year with an exercise price of $380, with a premium of about $5 per option. The total cost was approximately $570 million ( Delta ), and about $3.5 million ( Vega ).
• Google ( GOOGL ): Purchased 50,000 call options that expire in January next year with an exercise price of $360, with a premium of about $8 per option, totaling approximately $430 million ( Delta ), and about $2.5 million ( Vega ).
• Microsoft ( MSFT ): A Nomura client purchased 42,000 call options that expire in January next year with an exercise price of $585. The premium was approximately $11 per option, totaling about $630 million ( Delta ), and about $3.6 million ( Vega ).

The total amount of the three transactions is approximately Delta billion US dollars. In addition, some combination strategies of Amazon and Google that aimed to profit from price increases also underwent rollovers.

McElligott also pointed out a structural divergence in positions: Nomura's Beta monitoring shows that long-short hedge funds' Beta for the Mag7 basket ( BM7T ) is at the 96th percentile in history, with Microsoft at the 99th percentile, Tesla at the 97th percentile, NVIDIA at the 94th percentile, and Amazon at the 89th percentile; whereas mutual funds' Beta for the same basket is only at the 10th percentile.

His conclusion is: when benchmark fund managers significantly underweight the constituent stocks with the largest weights in the index, every time Mag7 performs better than expected, it becomes a performance pressure for them – which means that the financial reports of Alphabet and Microsoft (which have not yet been released at the time of writing this research report) will determine the outcome of this bullish-versus-bearish battle.

Momentum Strategy: “The Lost October”

Behind the AI sentiment recovery, McElligott pointed out that the pressure at the cross-asset risk premium level has not dissipated. He wrote that momentum strategies “are still trapped in a mechanical and continuous process of risk reduction/position management,” and the original trend signals “are either still moving in the opposite direction or, at least, have not returned to their original path.”

The bond market is a hard-hit area. McElligott indicates that although the most acute phase of short-covering has passed, bonds "have shown new resilience and are no longer being sold off as before" – yet this is precisely the same short-covering trend that previously destroyed many "high Sharpe ratio" trades.

Nomura QIS monitoring shows that over 30 trend signals have been marked as "reversals," covering U.S. 2-year, 5-year, 10-year, 20-year, and 30-year Treasury bonds, Spanish, German, British, Japanese, Australian, and Canadian 10-year Treasury bonds, as well as DAX, the Nikkei, the Korean Composite Index, the Russell 2000, and even commodities such as sugar, cocoa, and coffee.

McElligott summarized that the cross-asset momentum strategy has returned approximately -4.59% since October, U.S. stock momentum is around -7.16%, and the interest rate momentum/trend strategy has fallen by 3.5% to 4.6%; whereas energy stocks and crude oil/inflation hedging positions have recorded double-digit gains.

"Everyone has suffered margin calls": Staff turnover in multi-strategy funds

The cost of this turmoil fell on individual people. According to headhunters, approximately 100 fund managers lost their jobs due to this round of AI "growth panic," the margin calls from French government bond ( OAT ) interest rate spread trading, and the impact of cross-asset momentum liquidations.

McElligott quotes three industry comments from eFinancialCareers to outline the contours of this purge: "Everyone in London's macro hedge funds has been wiped out"; "Young people in Europe's high-yield markets have never experienced a real bear market"; and "Hedge funds have hired too many fools."

He wrote, "…In a context of low volatility, a large number of fund managers engaged in a large number of similar ‘rational’ trades, accumulating sustained positive returns. However, the rapid expansion of asset management scales led to a strong demand for talent, an almost universal need to recruit new staff (which may dilute the quality of the talent), as well as the high leverage required by relative value strategies or the high leverage deployed by options convexity strategies—these factors together created periods of rolling stop-loss exits… This is just reality; it is a byproduct of the success of these strategies themselves."

"This will eventually pass" – but the next round of purges may just be a matter of time.

McElligott ultimately characterized this cleansing process as a "self-validation" of a multi-strategy approach: it is precisely because losing positions are mechanically and emotionlessly closed out that multi-strategy funds are able to maintain long-term stable returns and continue to gain the favor of asset allocators. He wrote, "This will eventually pass; it is simply the nature of the industry. Performance dynamics will then come into play, clearing out excess positions and leverage from the system, and may also lead to much-needed recruitment for 'rebalancing'."

He also pointed out several potential risks: the yield on 10-year U.S. Treasury bonds returning above 5%, Brent crude oil approaching $115 per barrel, the Federal Reserve's interest rate hike in December being almost fully priced in by the market, and Goldman Sachs' historical research showing that the current interest rate hike cycle is most similar to that of 1999.

"The next round of stop-loss exits might just be a matter of time," McElligott hinted.