Observations & Insight
Cboe Global Markets Reports Several Trading Volume Records for Full Year 2018
The Spread – A New Year – 1/4
It’s hard to believe 2018 is in the rear-view mirror, but markets stop for no one. So without further ado, enjoy the first episode of “The Spread” in 2019.
Watch the video and see the stories referenced here »
Cboe Global Markets Announces Changes to Management Team
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today announced that Chris Isaacson, Executive Vice President and Chief Information Officer, will become Executive Vice President and Chief Operating Officer, reporting to Chairman and Chief Executive Officer Ed Tilly. Eric Crampton, Senior Vice President and Global Head of Software Engineering, will become Senior Vice President and Chief Technology Officer, reporting to Chris Isaacson.
MarketAxess Names Chris Concannon as President and Chief Operating Officer
Exchange industry veteran will lead expanded growth strategy
MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced the appointment of Chris Concannon, a veteran exchange industry executive, as President and Chief Operating Officer, effective as of January 22, 2019.
****JB: Wall Street Journal story on this move here.
It’s America First in Volatility Land With Anomalies Galore
Justina Lee – Bloomberg
As the world’s largest and deepest equity market, the U.S. tends to be the relatively steady hand among volatile peers. Not anymore.
The country is at the epicenter of global market anxieties from trade to monetary tightening and an economic slowdown. The U.S. gauge of future volatility, the VIX, has exceeded the equivalents in Europe, Hong Kong and even emerging markets a few times over the past month. This is an anomaly that’s become more commonplace since the market sell-off in February 2018.
Stock Pickers Wanted Volatility. It Made Their Performance Worse
Charles Stein – Bloomberg
Stock pickers have long claimed they would prove their mettle when markets became more volatile. That didn’t happen in 2018.
Only about 35 percent of actively managed mutual funds that buy large-cap U.S. stocks beat the S&P 500 Index last year, down from 42 percent in 2017, according to data compiled by Bloomberg Intelligence. The decline came even as average volatility, as measured by the Chicago Board Options Exchange Volatility Index, climbed 50 percent.
Get used to market volatility, it’s not going anywhere
Anik Sen – The Hill
Hindsight often offers 20/20 vision. Perhaps the mad equity volatility in the waning weeks of 2018 and early days of 2019 should have been expected. But there are many reasons behind the market’s jitters — and many reasons that suggest they may not be calming soon.
December is seasonally the lowest liquidity month of the year due to the holidays and because many hedge funds, which trade frequently and thus supply liquidity to the markets, have already closed their year.
Morgan Stanley Says Too Early to Call All Clear on S&P 500
Lu Wang – Bloomberg
Two weeks of rallies in U.S. stocks haven’t been enough to convince one of the widely followed Wall Street strategists to drop his cautious view on the market.
Mike Wilson, Morgan Stanley’s chief U.S. equity strategist ,whose 2018 prediction for a rolling bear market proved prescient, says in his late note to clients that, while he’s less pessimistic about stocks, investors hoping to buy the dip should be aware that Apple Inc.’s sales warning and a plunge in a gauge of U.S. manufacturing are likely the start of a new round of negative news.
Market Volatility: A Return To The Old Normal
Sarah Hansen – Forbes
Raise your hand if you think 2018—with its whipsawing days of 500 plus point Dow moves—was evidence that markets are more volatile than ever before. During the last 12 months, the S&P closed above 2,900 for the first time ever but starting in October downdrafts seemed like a daily occurrence. Indeed, 50% of the ten biggest single day gains and declines for the Dow Jones Industrial Average happened in 2018. Everything from Brexit to the trade war tweets to oil prices seemed to spark oversized moves in the stock market.
Exchanges and Clearing
Miami International Holdings, Inc. Reports 2018 Trading Results for MIAX Exchange Group; New Market Share and Volume Records Set as MIAX Options and MIAX PEARL Both Exceed 200 Million Contracts Executed
Miami International Holdings, Inc. today reported the 2018 trading activity for its two fully electronic options exchanges – MIAX Options and MIAX PEARL (together, the MIAX Exchange Group), with MIAX PEARL and the MIAX Exchange Group setting new market share and volume records over the course of the year.
Major Wall Street players plan new exchange to challenge NYSE, Nasdaq
Morgan Stanley, Fidelity Investments, Citadel Securities LLC and a host of other financial companies have agreed to jointly launch a new low-cost bourse that will compete with the New York Stock Exchange and Nasdaq.
In a joint statement on Monday, the companies said the new exchange would look to increase competition, improve operational transparency, reduce fixed costs and simplify equity trading in the United States.
****JB: No options (that we are aware of) but worth reporting nonetheless.
‘Kinked’ Volatility Curve Heralds Rocky First Quarter for Stocks
Luke Kawa – Bloomberg
Investors hoping for a restoration of calm on U.S. equity markets in 2019 had better brace themselves.
That’s the warning Credit Suisse analysts delivered Monday, pointing to a “kinked” curve representing implied volatility on the S&P 500 Index. It shows traders anticipating more volatility, especially in the first quarter when a bevy of events that might shock the stock market loom large.
Did We See The Bottom In Crude Oil On Christmas Eve?
Andrew Hecht – Nadex
The end of 2018 was ugly and got sloppy in the crude oil market. The price of the energy commodity dropped to its lowest level since June 2017 on December 24 when it hit $42.36 per barrel on the nearby WTI futures contract.
Bridgewater’s New Brain: A Millennial Woman Is Blazing To The Top Of The World’s Largest Hedge Fund
Nathan Vardi – Forbes
In August, Karen Karniol-Tambour warned that the U.S. stock market was priced for perfection, making it vulnerable to the sort of sell-off that took place in October. While convinced that in the long term investors need more exposure to Chinese markets, as of late October she wasn’t bullish about China for the short term, either. “It’s a good time to be nervous about financial assets,” she says.