---
title: "\"Hedge When You Can, Not When You Have To\" - Nomura Reflects On What 'Everybody' Is Thinking As 'Trump Collar' Unwinds"
description: "Nomura's Charlie McElligott discusses the market's shift from a focus on negative outcomes (left-tail) to positive possibilities (right-tail) as the 'Trump Collar' strategy evolves. The market has adj"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/250649249.md"
published_at: "2025-07-29T19:02:31.000Z"
---

# "Hedge When You Can, Not When You Have To" - Nomura Reflects On What 'Everybody' Is Thinking As 'Trump Collar' Unwinds

> Nomura's Charlie McElligott discusses the market's shift from a focus on negative outcomes (left-tail) to positive possibilities (right-tail) as the 'Trump Collar' strategy evolves. The market has adjusted to a more optimistic outlook, aided by recent economic data showing lower inflation fears and strong earnings growth. This shift has led to increased demand for equities and a positive wealth effect, despite concerns about a potential recession in 2025. Overall, the sentiment is improving as markets rally and volatility decreases.

From the big picture perspective, Nomura cross-asset strategist Charlie McElligott notes that it’s just been a pure play of what's been a sentiment swing “from left-Tail to Tight-Tail” for a few months now, really highlighting **the market's (over) fixation on hard left-Tail outcome-potentials around the Tariff tantrum, and totally under-pricing Right-Tail possibilities**, especially off the back of mechanical reallocation flows as we correctly anticipated the rVol collapse.

## **From Left-Tail To Risk-Tail...**

1.  The “Trump Collar” helped to compress then collapse realized Volatility off the most extremely 100%ile levels April / May, as the market reconditioned to his reaction function (selling the call at the highs with emboldened tariff rhetoric, but long the put into downside scares)…This vol compression turned outright vol melt thereafter, asthe Administration has now fully-embraced the pivot back towards Trump 1.0 “run-hot” policyw/ passage of fiscally stimulate OBBB (and away from that initial Trump 2.0 foray into spending cuts)
2.  Now, the market has mentally moved-past the subject of “Tariffs” as trade deals are rolled-out, and in some cases, avoided “worst case” previously assumed levels and their potential market negative impact on Inflation…Trump is now seemingly backing-off the “Sell Calls” portion of that prior “Trump Collar,” and instead, just GUNNING-IT AT HIGHS
3.  This “from Left-Tail to Right-Tail” has been further aided by thefive consecutive downside surprises in Core CPI, as the initial “worst fears” of the crowded market narrative of tariff-driven “Stagflation” were then avoided, downside melted, and the undercapture by investors of the Spot Equities rally eventually saw Right-side grabbing / hedging into Upside, which further created squeeze fuel provided by massive leveraged ETF demand from Retail
4.  The low bar for EPS growth in 2Q EPS after the Tariff freakout so far has then rationally been met with high “beat” rate…while now too you’re seeing earnings revision breadth really improve on 2026 EPS, as analysts and strategists now chase the market too
5.  As markets melt-up and rVol is smashed,FCI is easing powerfully (helping Consumer Conf HIGHER) and creating a positive wealth effect impulse in-turn, thanks to Equities / Crypto rallying, plus even the ongoing high returns on Cash
6.  Growth still holding nicely above 2%,nominal GDP still in that 5% universewith “full employment” (recent string of positive surprises in Initial Claims, Continuing Claims and NFP headline) and even the last upside surprise in recent Retail Sales shows theConsumer holds serve
7.  All-in-all,we see SPX making highs at the same time that betting-markets are saying “2025 Recession” -Odds are making lows of the year

### Related Stocks

- [NMR.US - Nomura](https://longbridge.com/en/quote/NMR.US.md)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.