Citadel Made $16 Billion Profit in 2022. ‘Largest Ever by a Hedge Fund.’

Jan 23, 2023

Observations & Insight

 

Lead Stories

Citadel Made $16 Billion Profit in 2022. ‘Largest Ever by a Hedge Fund.’
Adam Clark – Barron’s
Ken Griffin’s hedge fund Citadel made $16 billion in profit after fees in 2022, recording the largest annual gain ever by a hedge fund manager, according to estimates by a major industry investor.
Citadel topped a list of the 20 best-performing hedge fund managers released on Monday by fund-of-funds LCH Investments, part of the Edmond de Rothschild Group. The return for Citadel tops the $15 billion profit made by John Paulson in 2007 when he bet against subprime mortgages, according to LCH.
/jlne.ws/3kvws01

Don’t let the ‘bear market house of mirrors’ fool you, Morgan Stanley’s Mike Wilson warns of the stock market
Barbara Kollmeyer – MarketWatch
An important week for earnings is straight ahead, with the spotlight on updates from the tech space, which has been laying off thousands of workers.
Among those not expecting good news in the earnings pipeline is Morgan Stanley’s chief U.S. equity strategist Mike Wilson, who in our call of the day says investors need to beware of the “bear market hall of mirrors.”
/jlne.ws/3WyHCi7

Investors surge back into oil on rising economic optimism
John Kemp – Reuters
Portfolio investors have piled back into petroleum futures and options at the fastest rate for more than two years as concerns about a global business cycle downturn have eased.
Hedge funds and other money managers purchased the equivalent of 89 million barrels in the six most important petroleum contracts over the seven days ending on Jan. 17.
/jlne.ws/3GTVo9a

Exchanges

Schedule for Setting up Systems at New Secondary Data Center
JPX
Based on the “Second Report of the Technical Committee on Exchange Transaction” published by the BCP Forum of the Japan Securities Dealers Association on April 20, 2017, Japan Exchange Group, Inc. (JPX) has been constructing a new secondary data center (Kansai DC) in the Kansai region, which is a good distance from the Greater Tokyo Area, in order to prevent simultaneous disruption in the event of a large earthquake under the capital. We hereby announce the completion of the construction of equities and derivatives trading systems that accept orders and execute trades, and a clearing system that handles clearing after trades are executed, as indicated in the schedule below.
/jlne.ws/3XxCj3B

Regulation & Enforcement

Who’s More Competitive: Wholesalers or Exchanges?
Editorial Staff – Traders Magazine
The most controversial rule among the SEC’s recent proposals will likely be its Order Competition Rule.
Currently, wholesalers can buy order flow from retail brokers and provide a fill inside the National Best Bid and Offer (NBBO) without exposing the order to open market competition. In the proposed rule, Retail brokers or their wholesalers must submit orders to an eligible exchange for an auction, with the exception of orders that wholesalers can fill themselves at the midpoint price or better. When an exchange receives a retail order in these auctions, it will disseminate information about the order as well as the name of the originating retail broker so potential liquidity providers will know that it is a retail order.
/jlne.ws/3H3ZxHK

Strategy

This dividend-stock ETF has a 12% yield and is beating the S&P 500 by a substantial amount
Philip van Doorn – MarketWatch
Most investors want to keep things simple, but digging a bit into details can be lucrative — it can help you match your choices to your objectives.
The JPMorgan Equity Premium Income ETF has been able to take advantage of rising volatility in the stock market to beat the total return of its benchmark, the S&P 500, while providing a rising stream of monthly income.
/jlne.ws/3Xyyuv0

Opinion: ‘The Fed-fueled fantasy bubble has popped.’ Stock investors are detached from reality — but they’re about to get a big dose.
Michael Sincere – MarketWatch
After the U.S. stock market made all-time highs last year, I spoke with Jeffrey Bierman, a professional stock-trader with more than three decades of experience. Bierman also lectures on TheoTrade.com and TheQuantGuy.com, and is an adjunct professor at Loyola University and DePaul University, both in Chicago.
At the S&P 500’s SPX, 0.87% high he predicted a drop to 3600 or lower in 2022, and he was right. I recently caught up with Bierman to discuss his latest projections and strategies for U.S. stocks:
/jlne.ws/3H3V9Zi

Calm Before the Rally?
Mike Zaccardi – Investing.com
The marker is now in the heart of the corporate earnings reporting season. Traders will soon be digesting big tech’s fourth-quarter profits, as well as a Federal Reserve meeting and monthly jobs data. That’s a lot to take in. Volatility must be high with so much hanging on the line, right? Wrong.
/jlne.ws/3Xvhru0

Big Earnings This Week
Cboe
Joel Hawthorne @louiswinthrop talks about $SPX / $VIX options activity and this week’s earnings lineup in today’s #Vol411
/jlne.ws/3wphAmM

Education

FOMC Week: 10 Tips for Option Traders
TheStreet
During 2022, Fed-influenced events generated some of the largest intraday moves of the year in the indices.
Trading options during high volatility days can be challenging, as the market can feel unpredictable and prices can fluctuate rapidly. However, there’s no better tool to tackle high volatility than options. With the right strategies and mindset, option traders can still prevail during these periods.
/jlne.ws/3QXMOLb

Miscellaneous

Wall Street Quants Shouldn’t Confuse Luck With Skill
Aaron Brown – Bloomberg
Johannes Kepler is remembered for his seminal contributions to astronomy. However, like most 16th-century astronomers, he supported himself in part by making astrological predictions. His mentor, Michael Mäestlin, taught him to always prophesy disaster. If something bad happens, you’re celebrated for being right. If not, you’re celebrated for preventing catastrophe. Making optimistic predictions either makes you look foolish if bad things happen or be forgotten if nothing bad happens.
/jlne.ws/3HsFdBj

I Asked ChatGPT for Investing Advice in a Recession. See Its Strategy.
Phil Rosen – Markets Insider
Last November, OpenAI launched the intelligent language tool, ChatGPT, and it’s since exploded in popularity and netted a $10 billion investment from Microsoft.
The bot has impressed me with how well it can spit out articulate, comprehensive explanations for things as varying as dating app messages to news articles.
/jlne.ws/3H5gL7s

ICE to Start Rival Gas Market in London to Sidestep EU Price Cap

ICE to Start Rival Gas Market in London to Sidestep EU Price Cap

First Read Hits & Takes John Lothian & JLN Staff Thank you to all who replied to my request to help one of my Eagle Scouts who was recently laid off on the West Coast and is looking for new opportunities in the climate tech and sustainability space. You are...

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