Odd Lots Charlie McElligott on How Long the Stock Market Rally Can Go
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Jul 3, 2025 
Charlie McElligott, a Managing Director and Cross Asset Macro Strategist at Nomura, dives into the surprising resilience of the stock market following a significant downturn. He discusses the relentless selling of volatility as investors react to the rally sparked post-April's 'Liberation Day.' McElligott also examines the complexities of market dynamics, including the impact of inflation and corporate behavior. He highlights challenges that traders face and ponders how long this bullish trend can sustain amidst global uncertainties.
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Corporate Buybacks Fuel Rally
- The market rally is sustained by unexpected corporate buybacks hitting all-time highs.
- Inflation became an earnings catalyst due to robust consumer health and sustained nominal GDP growth.
Volatility Selling as Fixed Income
- Selling volatility has become a fixed income alternative due to bond market risks.
- Volatility selling compresses outcome distribution, stabilizing markets but adding risk if shocks occur.
Volatility Shocks and Reflexivity
- Market reflexivity driven by short-dated options creates complex volatility shocks.
- Unexpected events can blow up positions, showing market risks from mechanistic trades.