The rotation trade has caught most by surprise and big players have not been able to reshuffle risk in a timely manner. Recall that only a week ago most strategist were busy proclaiming the death of the reflation trade.
NASDAQ has underperformed big, but Asian/Chinese tech has been an even bigger dog.
We have written extensively on the topic, last here and here.
People still think of EM as commodities play, but it has transformed into a massive tech play (chart 2), and is currently being pushed hard as a long play. Even more importantly, EM volatility has crashed and is "underperforming" major vol indexes lately.
If NASDAQ is showing some relative "stress" and Asian/Chinese tech is basically crashing lately, do you pick up some cheap EEM volatility, VXEEM, just in case?
Do not forget, tech is also probably the biggest "equity duration" trade out there, and the move in yields is not great for tech.
NASDAQ vol VXN, China vol VXFXI and EM vol VXEEM.