Bridgewater Bets Big on Market Drop; Traders Bet on Volatility Comeback in 2020

Nov 22, 2019

Lead Stories

Bridgewater Bets Big on Market Drop
Juliet Chung and Gunjan Banerji – WSJ
Bridgewater Associates LP has bet more than $1 billion that stock markets around the world will fall by March, said people familiar with the matter.
The wager, assembled over a span of months and executed by a handful of Wall Street firms, including Goldman Sachs Group Inc. and Morgan Stanley, would pay off for the world’s biggest hedge fund if either the S&P 500 or the Euro Stoxx 50—or both—declines, some of the people said.

Traders Bet on Volatility Comeback in 2020
Gunjan Banerji – WSJ
U.S. stocks have been in a calm stretch. Investors are projecting that will end next year.
A better-than-feared corporate earnings season and swinging sentiment on U.S. and China trade talks have helped lift stocks to fresh records in recent weeks, pushing volatility lower. A number of factors make next year’s outlook rockier, leading some investors to pay up for hedges that would protect against a downturn well into 2020, according to Wells Fargo Securities.

Traders Fear Labour’s $11 Billion Tax Will Crush London Market
Viren Vaghela and Silla Brush – Bloomberg
Traders in London say the Labour Party’s proposal to introduce a broad financial transaction tax risks paralyzing trading activity in the city.
The opposition party led by Jeremy Corbyn announced a plan Thursday to raise as much as 8.8 billion pounds ($11.4 billion) a year from levies on trades such as derivatives or large volumes of currency, where London currently dominates the market.

Oil traders bet on economic upswing in 2020: Kemp
John Kemp – Reuters
Crude oil traders are betting the market will tighten significantly next year, even as the major statistical agencies predict production will outstrip consumption and oil inventories will rise.
Most of the divergence can be explained by differing assumptions about global growth in 2020.

Outsourced Trading Goes Viral
Michael Mollemans – TABB Forum
More than 20 years after its introduction, ‘outsourced trading’ has become an umbrella term, with no single operating model. As the service options mature and governance considerations increase, however, buy-side firms searching for an outsourced trading partner are often left with many unanswered questions. TABB Group senior analyst Michael Mollemans sheds light on this rapidly growing segment of the brokerage industry.

Breakingviews – Review: Math steals the show in quant legend’s bio
Anna Szymanski – Reuters
It’s a challenge for the subject of a 359-page biography to remain a cipher. But Jim Simons has always been up for a test. The mathematician and founder of Renaissance Technologies, the super-secretive quantitative investment firm, created the flagship Medallion fund in 1988. It has since produced average returns of a mind-boggling 66% a year, before fees. All this from a man who never took a finance class. But the most interesting subjects in “The Man Who Solved the Market” are the models Simons helped design, and the math behind them.

The market and its fear gauge that tracks volatility are moving together. That could be a bad sign
Yun Li – CNBC
The Cboe Volatility Index, which typically trades inversely with stock prices, has been moving in tandem at times with the S&P 500 for the first time in six months. Negative news on China trade has done little to lift market volatility recently.

Exchanges and Clearing

A. Single Stock Futures/Single Stock Dividend Futures: Introduction of three SSFs and two SSDFs; B. Single Stock Futures/equity options: Withdrawal of admission; C. Single Stock Futures/equity options: Name change
Eurex Exchange
Eurex Circular 112/19 A. Single Stock Futures/Single Stock Dividend Futures: Introduction of three SSFs and two SSDFs; B. Single Stock Futures/equity options: Withdrawal of admission; C. Single Stock Futures/equity options: Name change

CME Group Announces Ken Griffin as the 2019 Melamed-Arditti Innovation Award Recipient
CME Group (press release)
CME Group’s Center for Innovation today announced that Citadel Founder and CEO Ken Griffin is the 15th recipient of the CME Group Melamed-Arditti Innovation Award. CME Group presented the award at the 12th annual Global Financial Leadership Conference in Naples, Fla., this week.
The award recognizes Griffin for his significant contributions to the financial industry. Griffin got his start trading convertible bonds from his Harvard dorm room and founded Citadel in 1990, shortly after graduating. Today, Citadel is considered one of the most respected and successful investment firms in the world, managing over $32 billion in capital for its partners, which include government investment programs, pension funds, endowments and foundations.

Euronext announces its financial calendar for 2020

Carol Kennedy and Arianne Criqui Recognized for Excellence in their Fields
Cboe Blog
Carol Kennedy, Chief Marketing and Communications Officer, and Arianne Criqui, Global Head of Derivatives and Global Client Services, were honored at the 5th Annual Markets Media Awards: Women in Finance for excellence in their fields. The awards recognize the most talented and accomplished women in the finance industry. Carol and Arianne were nominated because of their dedication, passion and persistence. They are extraordinary at what they do and exemplify what it means to be a leader. Learn more about each of them below.

Regulation & Enforcement

Notice Of Disciplinary Action
No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side of such order for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority.

Japan’s ‘anti-activism’ law is passed by parliament
Leo Lewis – Financial Times
Japan’s parliament has passed a highly controversial bill aimed at protecting companies whose operations affect national security from foreign investors.
The new rules, which cut the threshold at which foreign investors have to notify regulators ahead of purchases of shares in potentially sensitive companies from 10 per cent to 1 per cent, have been labelled as an “anti-activist law” by critics.

Sell Side Preps for Next CAT Deadline
Rob Daly – Trader’s Magazine
When the US equities and options markets begin their report-submissions testing for the Securities and Exchange Commission’s Rule 613 Consolidated Audit Trail on December 16, the sell-side firms are much more prepared than their European counterparts were in meeting their MiFID deadline, according to industry observers.
“The difference is that MiFID touched every piece of the workflow and multiple European exchanges were going in different directions,” Linda Middleditch, executive vice president, head of product strategy at Itiviti, told Markets Media. “They were not unified in their implementations and were often late in announcing how they were going to implement it. You were dealing with quite a moving target.”


Ask a Fool: Is a Covered Call a Risk-Free Income Strategy?
Matthew Frankel, CFP – The Motley Fool
Q: I’ve been learning about options and am thinking about writing covered calls against some of the stocks in my portfolio. It seems like this is a pretty risk-free way to generate income — what’s the catch? First off, for those who aren’t familiar, a covered call essentially means that you sell someone else the right to buy a stock you own. As an example, if Company X trades for $65 per share and you own 100 shares, you might sell a call option that allows another investor to buy your shares at $70 each anytime within the next two months. In exchange for selling this right, you receive a payment.


Welcome to OptionsPlay
The most intuitive options education and trading analytics.

****MR: Looking to learn about options trading but not sure you want to risk losing your hard-earned cash just yet? Nasdaq’s OptionsPlay is a handy way to get some practice. It simulates options trading with fake money, almost like a video game. The OIC also has an excellent section on the basics of options trading, as does Cboe


How No-Fee Investing Caught on
Claire Ballentine and Annie Massa – Bloomberg
Investors have gotten used to paying lower fees to buy and hold stocks and funds. But the trend entered a whole new phase this past year as U.S. brokers and fund managers began offering stock trades and investments at zero cost. Any suspicion that zero-cost investing was a gimmick was quashed in October when industry titan Charles Schwab Corp. announced plans to eliminate commissions for U.S. stocks, exchange-traded funds and options. Its competitors soon followed suit.

MarketsMedia Women in Finance Awards 2019
Trader’s Magazine
At a gala event Wednesday night in downtown Manhattan, Markets Media announced its 2019 Markets Choice Awards — Women in Finance.
This year saw upwards of 55 awards handed out, up from 47 awards given back in 2017. Congratulations to the winners!

*****Congratulations to this year’s winners!~MR

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