“You are going to see a crack in the bond market, OK?”
Jamie Dimon is good at saying things that get your attention.
I tried to follow that example at the NIRI Annual Conference this week as a panelist on Data-Driven IR for moderator Fatma Sardina from Copart (CRPT) along with Moriah Shilton from Rivel and my good friend Tim Lind from the DTCC. We had a full room.

I used the WSJ story by Caitlin McCabe May 29 about hedge fund Marshall Wace (subscription required) as the opening salvo. With $70 billion of assets, the big British firm collects colossal amounts of data – equivalent to 400 billion emails daily says the WSJ – to drive trades.
I said: That giant data-powered howitzer is aimed squarely at you in the IR chair, and you need to have a plan for dealing with it.
And I said to picture yourselves in a boat afloat on the cold north sea and an ice cube drifts by that says “consensus estimates” and you pick it up, content that you now know everything.
And right by you is a leviathan iceberg labeled “Passives and Machines” and you’re unaware of it.
Using examples, I said that public companies need the “AND” strategy. That is, everybody’s got a story. Telling the story via decks, analyst days, earnings releases, social media, colored a big part of the conference content, as ever.
“AND” is adding an intentional plan for Passives and machines. As my wife Karen phrased it: “You should understand all the behaviors in the market, not just Active money focused on your story, and control the controllables so you aren’t surprised by volatility.”
What’s this got to do with the bond market? I think the equity market will crack too. Not for any fundamental reason. Not because Passives dominate. There’s a delicate balance. Data powers automated trades. Much of that automation aims at keeping stocks, ETFs and options aligned. A small number of very potent firms are responsible.
In that vein, during the early April disruption there were times when Hudson River Trading – I’ve written about them but they’ve stayed largely unknown to the public – was 20% of the stock market (say my data sources).
If ONE party behind a material part of volume and prices hiccups, something will break. And maybe it’s just a machine instructing itself to do or not do something.
I don’t sit around worrying about it anymore than Jamie Dimon is wringing his hands over the risk in the bond market. He’s just stating an obvious concern and a mathematical fact: Odds are, something goes awry.
It doesn’t take a tweet or a spat to cause failure. I’ll give you a case in point. We found a large data error for one of our suppliers that was impacting some of the biggest companies in the market including Meta and Microsoft. Apparently nobody else saw it.
What if you fire up your algorithms and chew into bad data and they, to use a term I’ve often heard our engineers utter, herk? It means what it sounds like. They throw up.
In that vein, the quantitative data we compile reflects an extraordinary overdependency in equities. At the all-time record highs Feb 19 (S&P 500 at 6,129), there were 123 stocks with $100 billion or more of market capitalization.
At current levels, there are 125. The big are getting bigger. Those 125 are about 70% of market cap. By comparison, the entirety of the Russell 2000 is 5% of the market cap of THOSE stocks. Most of May’s gains came from Big Tech. The key behavior behind it was Passive money.
And it’s reflected in Demand and Supply. Broad Market Sentiment has fallen from 7.1 May 21, to 4.8 yesterday, with Short Volume (Supply) marketwide at 54%, a hair off the all-time record of 54.8% May 7.
And stocks haven’t budged. It strains credulity. It feels like a giant, creaking overhang that could snap off violently at any moment like a glacier in the alps.
I don’t know that it will! But it’s wise to beware, just as it’s wise to have a plan for countering the quant bazookas and attracting the big market buyer, Passive money.
Back to NIRI, I was reminded of the joy of camaraderie. It took me a half-hour to walk from the session rooms to the escalator because I kept running into friends. And Sunday night I was out way past my bedtime reminiscing and reconnecting.
There’s nothing broken in my beloved investor-relations community (though maybe it should put a little less into story, a little more into data). The market? We’ll see.