Citadel Securities: Leverage Reset Is Over, Re-Leveraging May Be Ahead
Nashnova编辑部
Citadel Securities strategist Scott Rubner says the U.S. equity de-leveraging is largely done and multiple buying forces are converging — but he warns the next risk is leverage quietly building back up.
What does "the leverage reset is over" actually mean?
The leverage reset — the process where panicked selling forces investors to unwind borrowed positions — is largely complete.
Leveraged-ETF assets shrank by over $60 billion from their June peak, falling to $154 billion. This means → most of the forced selling has already happened.
The VIX — a gauge of market fear — spiked above 20 in late July but has since settled near 15. In plain terms = the market mood shifted from "panic" back to "okay."
Who is buying, and where is the money coming from?
Retail investors sold in late June, have now returned, but are still buying protection — willing to buy, still nervous.
Passive ETF flows keep coming in "non-stop" — this is auto-pilot money that buys on schedule regardless of headlines.
Corporate buyback authorizations have topped $1 trillion, and the buyback window is about to open. This means → companies buying their own stock with their own cash — a high-certainty source of demand.
Why does Rubner say earnings tell "a simpler story"?
Rubner's words: "The macro debate remains complex, but the message from corporate America is simpler: earnings are beating expectations, and beating them by a wide margin."
This reflects a disconnect: investors argue endlessly about the macro picture, yet company results are giving a much clearer answer.
Strong earnings are a key driver pulling investors back in. In plain terms = companies are making money, so capital follows.
What is Rubner actually worried about?
The multiple buying forces are "reinforcing each other," making August likely favorable overall.
But he is cautious on September: seasonal headwinds kick in and crowded-positioning risk rises.
His specific warning: if August turns into a chase-the-rally trade, some buying power will be spent early. This means → the harder the August rip, the less ammunition is left for September.
Is "re-leveraging" bullish or a risk signal?
Rubner's call: if volatility keeps falling and trends re-establish, systematic strategies — quant funds that trade automatically by model — will start adding exposure again.
"The next meaningful mechanical flow may be re-leveraging, not de-leveraging."
In plain terms = machine-driven money switches from "cut risk" to "pile back in" — that lifts the market short-term, but the more leverage builds, the harder the next pullback hits.
Content is for reference only, not financial advice.