A Goldman Sachs survey of big-money investors found that half think the stock market has further to fall; These Charts Show the Extent of the Grim Credit Market Reversal

Apr 7, 2020

Lead Stories

A Goldman Sachs survey of big-money investors found that half think the stock market has further to fall
Ben Winck – Markets Insider
Half of the institutional investors recently surveyed by Goldman Sachs expect the S&P 500 to reach new lows before bottoming out.
US stocks have rebounded in April after sharp volatility and heightened coronavirus fears drove massive sell-offs throughout March. Major indexes were dragged into bear-market territory at the fastest pace since 1933 as investors weighed the long-term effects of a prolonged economic slowdown.

These Charts Show the Extent of the Grim Credit Market Reversal
Shannon D Harrington – Bloomberg
It took just two weeks for a decade of easy—sometimes anything-goes—credit markets to screech to a halt. Investors who were once willing to lend to even the riskiest companies suddenly pulled away. In response, central banks promised to flood markets with liquidity. Despite those efforts, market observers are expecting a surge of bankruptcies as an unprecedented corporate borrowing binge meets the realities of a post-pandemic economy.

It’s Back to the Future for Currencies With Volatility Like 2008
Vassilis Karamanis – Bloomberg
The global financial crisis may offer proper guidance on how currency volatility will play out beyond the current market turmoil, even though the two shocks are vastly different in nature.
What seems clear is that investors may need to say goodbye for the foreseeable future to the low-volatility regime in foreign exchange, with hedging throughout 2020 likely to be costly, compared to recent experience.

Inside Volatility Trading: April 7, 2020
Kevin Davitt – Cboe blog
Sigma is the 18th letter in the Greek alphabet and there are three distinct notations. The Greeks developed an incredibly robust culture with advanced comprehension of the natural world including mathematics, medicine, and economics.

Exchanges and Clearing

NYSE says industry will review circuit-breakers after vertiginous drops
Philip Stafford – Financial Times
The New York Stock Exchange is planning to review the effectiveness of market-wide systems designed to dampen extreme volatility after circuit-breakers were tripped several times last month during a stampede from risky assets.
In mid-March US markets saw a series of 15-minute halts to trading following big drops in the S&P 500 index, as investors spooked by the spread of coronavirus scrambled to dump positions.

Eurex adds to MSCI index-based futures and options; Eurex Exchange continues to expand its MSCI index-based derivatives after adding to suite of products this week.
Hayley McDowell – The Trade
European derivatives exchange Eurex has confirmed it has added a further 14 futures and two options to its current MSCI index-based derivatives suite. The new derivatives were added to the exchange this week and include futures on MSCI Kuwait, which will enter the MSCI Emerging Markets index at the end of May. It also includes further European country futures on the Netherlands, Spain and Nordics region.

Eurex extends MSCI offer with 14 futures and 2 options
With 122 listed MSCI index-based futures, 20 MSCI index-based options and an open interest of around 2.5 million contracts, Eurex is already the exchange with the broadest MSCI index-linked offering tradable on one platform, and the highest open interest globally.

Monthly figures for March at Eurex and EEX
March and Q1 2020 saw growth across a range of product classes and services at Eurex and EEX. Across the whole of Q1 2020, overall volumes in OTC clearing showed growth, with an average daily cleared volume of 144 billion EUR – up 12% from 128 billion EUR in Q1 2019. These figures include strong growth in the IRS product, reaching an ADV of 16 billion EUR – up 40% from 11 billion EUR in Q1 2019. Notional outstanding volume was 17,575 billion EUR in March 2020, of which 40% was in IRS.


FedEx and 12 Other Underpriced Stocks to Play With Options
Steven M. Sears – Barron’s
If the medical community’s coronavirus models prove accurate, the U.S. death rate could peak over the next two weeks. Some investors think that is a sign to buy stocks.
Such thoughts will surely offend many people who are scared for their lives, or who have family and friends struggling to survive, but such is the time-tested discipline of buying amid great misfortune, including war and even a global pandemic.


Webinar: Covered Calls
Apr 08, 2020 3:30 – 4:30 PM CST
Covered calls are one of the most often used options strategies – and for good reason. They can do two things: create an income stream and set an exit price for the underlying asset. Learn from one of the most recognized names in the industry as our featured speaker will be Alan Ellman, President of The Blue Collar Investor, who will take a deep dive into Covered Calls.


The market’s biggest stock-pickers quietly had their best quarter since the financial crisis as coronavirus caused historic turmoil
Ben Winck – Markets Insider
Despite stocks’ worst first quarter in history, more than half of all large-cap fund managers beat the market.
Nearly 60% of all large-cap managers beat their Russell 1000 benchmarks during the turbulent quarter, Bank of America analysts said Friday, the best outperformance rate since the 2008 financial crisis. The average fund sank 19.5%, while the broad index tumbled 20.2%.

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