Sometimes there’s a man — we won’t say a hero, because what’s a hero? — but sometimes there’s a man — and we’re talking about Charlie McElligott here — sometimes there’s a man who, well, he’s the man for his time and place, he fits right in there — and that’s Charlie McElligott, at Nomura.
Around 3,000 clients receive sporadic market dispatches from McElligott, managing director of cross-asset strategy at Nomura. They’re not like the other notes. Where most market commentary tries to combine pithy takeaways and carefully-curated charts, McElligott embraces ambiguity with visual and textual panache, focusing on option contracts and volatility. In the wild markets of recent years, they’ve become essential reading.
His style is . . . idiosyncratic. McElligott is the Voltaire of vol, a prose innovator whose writing is polemical and packed with internal dialogue. Or, perhaps, he’s the Woolf of Wall Street — if the Mrs Dalloway author had a Bloomberg Terminal and a penchant for highlighting. Here are some disparate examples from a recent email:
“If you guys can’t tell, I’m very stream-of-consciousness, probably with awful non-editing and thoughts that get dropped in the middle of a sentence, but that’s kind of the product right?” he told FT Alphaville. “I mean it’s like, the insane ramblings of me.”
The interceptor
McElligott’s notes runs under provocative, all-caps titles. This doesn’t appear to be born of necessity (other Nomura emails arrive with mixed-case subjects) but creates associations ranging from avant-garde poetry collection title, to yelled instruction, to late-tens rap track.
Recent examples include: “TURNING, CHASING”, “GO TIME”, “BIG $HARPES, BIG PROBLEM$?”, “LIGHT / TUNNEL” and “IT BURNS”. Even periods of relative calm are injected with this frantic energy — September 6th’s “WAITING” being a good example.
Analysis begins in medias res, with McElligott resembling the military sergeant who wakes you up during an enemy raid in the first mission of a video game.
There’s no real schedule as to when these dispatches arrive: McElligott writes when it is needed.
“My job is to kind of reverse-engineer car accidents,” he told us, “and figure out where the imbalances and where those asymmetries are — whether it’s market narrative or positioning — what could make them go wrong and kind of cut that off at the pass.”
Information overload
McElligott gets around five hours of sleep before his alarm goes off at 1:30am, but sometimes he’s so eager to write that he wakes up sooner. When working from home, and “depending on the market environment”, he allows himself the luxury of a lie in. These tend to last until about 3:00am.
Nomura’s offices are in downtown Manhattan, but McElligott’s home is about 30 miles away in New Jersey. Commuting, he says, is generally “for the birds” — though he was in the office when we spoke last week.
“The most important thing is that I get my thoughts out and I move on,” he says. “I have to declutter my brain, and then when I do get a break, I liken it to [when IT workers say] ‘We’ve got to defrag, you need to shut this down for a couple of minutes to get all the residual out.’”
As a result of this monomania, extracting information about McElligott from McElligott is not easy. His responses to questions are often sprawling, multi-minute epics taking in the sweep of recent market history, current trends and, eventually, sometimes, an answer.
His job, he says, is “to flag stuff people probably aren‘t seeing on their own” — in recent years, that has been all about volatility: where it is, where it isn’t, and where it might be going.
It’s the product of a career, including stints at UBS and Royal Bank of Canada, where he found a niche in understanding the connective tissue of markets.
“At that time [pre-financial crisis, at UBS], you either covered the whale- type accounts — the big mutual funds — or capital on the West Coast or whatever it was . . . no one really cared about macro funds or credit crossover funds or systematic quant funds at that at that time,” he says. “They were just too opaque and non-core. But that was the stuff that fell into my lap generally.”
Despite an increased appreciation of how much these factors matter to global markets, McElligott’s specialisms remain too recondite for some audiences.
“A few years ago I stopped doing CNBC interviews because they were telling me to dumb everything down,” he says. “You can’t talk about options, the Greeks, you can’t talk about systematic trend strategies, you can’t talk about performance-based, behavioural exposure moves. And these concepts, they need to be discussed.”
Catching the breaks
Here’s an example of a typical McElligottian thought process:
“I’m sure it’s at times like ‘I’m going to have an epileptic seizure [if there’s] any more colours and highlights’,” he says. “It’s funny, right? Because over the years people say ‘OK, I need the colours because they give me some directional sense. Like, OK, a bold red or a highlighter red is telling me this is maybe some sort of a dangerous some sort of a shock or some sort of a downside. The green is obviously converse…’.”
Typographical trappings aside, it’s an attempt to bottle the lightning of tempestuous markets.
“I think the value I provide is that I’m doing it in real time, instead of the end of the week when the move already happened,” he says. “I try to be provocative . . . but with the justification: ‘What is going to hurt the most? How could this go wrong?’ That’s a constant theme.”
The hot take
McElligott’s notes are hard to quote from (try getting “Vol is again aloof” past an editor) but invaluable when markets are at their most turbulent.
Most commentators attribute the recent bond and equity rally, for example, to October’s lower than expected inflation numbers and, before that, Powell’s apparently dovish speech on November 1, when the FOMC left rates unchanged for its second meeting in a row.
But as McElligott pointed out, it was the Treasury’s “issuance twist” refunding announcement — more highly in-demand short-term Treasury bills, less long-term Treasury notes — released the same week that really got the party started.
Ahead of the Treasury’s announcement “the market was assigning too low of a delta that they were potentially going to pull off this issuance twist and the issuance twist frankly, if you’re looking at one catalyst that started this cross-asset rally a few weeks ago, this was it, right?” says McElligott.
The ensuing “everything rally” — predicated on a sense that the Fed is now “at risk of falling behind the curve with regards to cutting” — has proved a painful trade for under-positioned or short investors, some of whom may be suffering from “performance or career anxiety” following a year in which the magnificent seven tech stocks have generated almost all of the return.
“That’s why you have to be in this very tactical couple-of-days-at-a-time worldview,” McElligott says. “I always get a kick when people are like, ‘what’s your view for 2025 earnings?’ I’m like, ‘Yo, nah, that’s not where I operate.’”
Meat, sleep, vega, repeat
McElligott’s all-out professional lifestyle is underpinned by a Paleolithic diet, the details of which he laid out in a podcast interview with Macrohive earlier this year:
I’m one of those dudes who’s, I was doing Paleo for a decade plus, now I’m almost exclusively carnivore — red meat, organ meat, can’t eat enough fat, animal fats, butter, raw milk all that stuff. And that’s core, and living this anti-inflammatory lifestyle, disease of excess is all about inflammation these days.
He couples this with other treatments, like infrared saunas, red light therapy, hyperbaric oxygen therapy, high intensity resistance training and cold plunges. All of which is supplemented with anti-ageing treatment NAD+, peptides and about 30 other pills and powders a day.
His carnivorous, “pure anti-inflammatory” philosophy runs from the radical:
Pretty much anything that you’ve learned with regards to what is purportedly best behaviours, if you flip those on their heads — ie the food pyramid — you’re in a far better place if you completely do the opposite . . . that’s where I am in the spectrum right now.
To the gnomic:
Vegetables are kinda a scam.
This approach requires an unrelenting focus. Other than a two-week block of holiday, with a no-devices policy in place, McElligott — who has a wife and three young children — stays plugged in, ingesting information until he can’t take any more.
“Sometimes this stuff just accumulates and I gotta like, spit it out there,” he says.
He gets ideas from three main sources: the data, his colleagues, and his clients — leaving little time for outside reading.
“It’s a very dynamic feedback loop,” he says. “There’s a lot of ongoing flow you have . . . you end up putting together this really disparate web of information that helps mould a pretty insightful real time picture. It’s not that slow-moving, deep-dive research that’s a little bit removed from ‘the current trade, what’s the current trade?’”
A vol-ing stone
But nothing lasts forever, even volatility.
“There’s been three years of great markets for macro watchers,” says McElligott. “So I’m getting nervous, though, that that time is coming to an end sooner than later. And particularly [as I’m] sitting on a vol desk. You know, resumption of a rate cut environment is, is not the world you want to be in if you’re on a vol desk.”
As inflation calms, and rate-tightening sequences of recent years grind to a halt, many people in finance will be breathing sighs of relief. Will McElligott be among them?
“I mean, selfishly from my personal health perspective, perhaps you know, the 1:30 [AM] wake-ups are not the best thing when you’ve got three kids under 11,” he says.
“But I truly mean this: I love this stuff. I’m motivated. I come in, my brain is like, spilling over on my morning drives into the office or to get in front of the computer . . . I love it. I get sad at the thought that we’ll move back to less shock and awe, and less momentum unwinds, and less vol downs.”
