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Hedge Funds Aggressively Shorting VIX Shouldn't Ring Alarm Bells

  • ‘More nuanced’ picture shows ETPs near record long: BofA
  • No relationship between net VIX position and S&P returns: MRA
Traders always put their hands on their heads when the market falls.
Traders always put their hands on their heads when the market falls.Photographer: TIMOTHY A. CLARY/AFP

Hedge funds shorting stock volatility en masse is the latest canary in the coal mine for those fretting dovish central banks are setting the stage for the next market blow-up.

Not so fast, says a growing chorus of Wall Street voices.