Carefree investors should heed lessons from 2018 shake-out; Euro Volatility Hits Record Low in Defiance of Market Theory

Jan 15, 2020

Lead Stories

Carefree investors should heed lessons from 2018 shake-out
Robin Wigglesworth – Financial Times
Financial markets have suffered a few frights already this year, but despite the shocks delivered by US president Donald Trump and Iran, they have largely picked up where they left off in 2019. What could stop the ageing bull run?
With Middle East tensions simmering down, the FTSE All-World has managed to notch up a 1.4 per cent gain so far in January. That has extended the global equity rally over the past year to more than 21 per cent. The US equity market has once again outperformed, and US technology stocks still rule the roost. The Nasdaq has climbed another 3.4 per cent in 2020, taking its gain since the beginning of 2019 to almost 40 per cent. Tesla alone is up 20 per cent in two weeks.

Euro Volatility Hits Record Low in Defiance of Market Theory
Vassilis Karamanis – Bloomberg
Expectations that volatility in the euro could stage a return this year are getting knocked back.
The cost of hedging price swings in the common currency in the medium- to long-term touched fresh record lows on Wednesday, even amid higher regional inflation expectations and bunds facing pressure for much of this month.

Investing Insider January 15: Wall Street fears, 20 trades, 6 trends
Joe Ciolli – Business Insider
Dear Readers,
With so much focus on the US-China trade war and ongoing tensions with Iran, it’s entirely possible for other risks to slide under the radar. But what if we told you that Wall Street is actually most worried about something else entirely — a force that’s lingered dangerously under the market’s surface for years?
That would be inflation, which has remained low throughout much of the almost 11-year bull market, but could wreak havoc if a spike occurs. We surveyed experts from BlackRock, JPMorgan, and Morgan Stanley, and found that it’s their foremost concern related to the stock market, even as geopolitical turmoil swirls.

US equities juggernaut forces bear days into the wilderness
Philip Stafford – Financial Times
It has become a truism of investing in the past decade that “there is no alternative” to buying equities.
That period has seen central banks move, and cling, to ultra-low interest rates, and act aggressively to calm markets when it looked like that policy might end. Some traders now view any dip as a buying opportunity and global stock indices ended last year near record highs.

December Performance Snapshot
RCM Alternatives
We field a bunch of calls at the start of each month asking how that hedge fund, this emerging manager, and that mutual fund did last month, and thought to simplify things for you with this categorized list of different alternative investment performance for the month gone by.

Inside Volatility Trading: January 15, 2020
Kevin Davitt – Cboe blog
As the holiday season draws to a close, I am reminded of the music of my childhood. When we put up holiday decorations my mom would invariably play The Three Tenors Christmas on an antiquated cassette player. I can still hear Luciano Pavarotti, Plácido Domingo, and Jose Carreras singing Silent Night or Happy Christmas (War is Over) in my mind. They were the only “tenors” I knew until I started working on the Cboe.


Euronext completes the acquisition of Nord Pool
Euronext today announced the completion of the acquisition of 66% of the share capital and voting rights of the Nord Pool group1, after receiving regulatory approvals. With the acquisition of Nord Pool, the second largest power market in Europe, Euronext diversifies its revenue mix by entering the power market, and reinforces its commodity franchise. This transaction also contributes to the group’s ambition to grow its presence in the Nordic region and further strengthens Oslo as Euronext’s main hub in the Nordics.

Cboe Plans Comeback in Crypto Markets
Josephine Gallagher – Waters Technology (subscription)
The Chicago Board Options Exchange (Cboe) plans to make a comeback in the crypto space, after shelving its bitcoin futures contracts in March of last year. The exchange had experienced several failed attempts to gain approval from the US Securities and Exchange Commission (SEC) to allow digital exchange-traded funds (ETFs) to be listed and traded on its platform.

Regulation & Enforcement

SEC Market-Surveillance Project Hits Snag Over Hacker Fears
Alexander Osipovich – WSJ
A project to create a massive market-surveillance database for U.S. financial regulators is encountering fresh resistance from Wall Street brokerages that fear it could be targeted by hackers seeking investors’ private information.

NYSE Disciplinary Action #2019-01-00042
During the periods from September 2016 through December 2018, Sanford C. Bernstein & Co., LLC violated NYSE Rules 132 and 7.33 (for certain orders sent after July 27, 2017) by submitting trades with inaccurate account type identifiers for comparison and/or settlement, and NYSE Rule 3110 by failing to implement adequate supervisory systems and controls related to the submission of account type identifiers. Consent to a censure, $100,000 fine, and an undertaking to revise its written supervisory procedures.

SR-NASDAQ-2019-100 Notice & Approval
A proposal to amend Options 3, Section 3 (Minimum Increments) to extend through June 30, 2020


Trading Technologies Launches Connectivity to Leading Futures and Options Cryptocurrency Exchange Deribit Via the TT Platform
PR Newswire
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and Deribit B.V., holding company of the leading Dutch cryptocurrency futures and options exchange Deribit, today announced TT has launched connectivity to Deribit.

DASH Launches Enhanced Liquidity Solution for US Listed Options
Trader’s Magazine (press release)
DASH Financial Technologies, the industry’s leading capital markets technology and execution provider, today announced the launch of an enhanced liquidity solution within its agency listed-options routing suite, SENSOR. DASH ATS™ is an innovative alternative trading system designed to solve the liquidity sourcing challenges inherent in today’s US listed options market.

Hedge fund puts $550m into technology stock option financing
Miles Kruppa – Financial Times
A New York hedge fund is injecting $550m into the grey market for start-up employee share options by providing financing for SecFi, a platform that allows workers to cash out without waiting for their companies to go public. The big bet by Serengeti Asset Management, which manages more than $1bn in private and public debt and equity, is another example of the competition among hedge funds and other non-traditional investors for access to late-stage private investments.


A Swiss bank is giving clients the chance to bet up to $40 million on the US election outcome
Ben Winck – Markets Insider
A Swiss bank is selling structured notes that strictly hinge on the outcome of the 2020 US presidential election, Bloomberg reported Tuesday.
Julius Baer Group is offering up to $40 million of notes tied to two baskets of American stocks. The vehicles are meant to profit should their corresponding political party take the White House in 2020. The bank’s structured notes mature in one year, and holders will be paid the performance of the included stocks on the maturation date, Bloomberg reported.

****JB: Not options related but interesting.

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