Observations & Insight

October 16th MarketsWiki Education Intern Recruiting Event Chicago
Students who want to learn about the financial services field are invited to join us at our October 16th MarketsWiki Education Intern Recruiting Event Chicago, where financial services professionals will deliver informative presentations about careers, trends and opportunities in our global markets. This event also includes a new job fair for student internships in 2018.

Lead Stories

‘False Peace’ for Markets? A Trader Is Betting Millions on It
Landon Thomas Jr. – NY Times
Last Wednesday was another good day to make money on Wall Street: Stocks pushed up, interest rates were at rock bottom and the VIX gauge of investor unease was again trending downward.
But as investors celebrated yet another bounce-back from a market slip, Christopher Cole, a trader who runs a hedge fund here that makes bets on various forms of financial apocalypse, spotted something amid the sprawl of data and code that decorated the wall of screens before him.

CBOE’s Chris Concannon says bitcoin is here to stay, and futures will let you short the cryptoasset
John Detrixhe – Quartz
Chris Concannon’s career in electronic markets has spanned just about every role, from Securities and Exchange Commission attorney to executive positions at the world’s biggest stock exchanges and at trading firm Virtu Financial. Now, the chief operating officer of CBOE Holdings, which owns Chicago Board Options Exchange, is diving into cryptoassets.

Bond Traders Place a Cheap Bet That Fed’s Still in Play in 2017
Brian Chappatta and Edward Bolingbroke – Bloomberg
Bets on another Federal Reserve rate hike this year are gaining favor after being all but abandoned a few days ago.
Eurodollar futures, among the most sensitive financial instruments to Fed speculation, show some traders have concluded that wagers on additional tightening in 2017 are too cheap to pass up. Last week, the market-implied odds of another rate increase by year-end plunged below 25 percent, and at one point fed funds futures didn’t fully price in another hike until 2019. Now, traders see the probability of one more hike in 2017 at about 35 percent.

Bitcoin at crossroads after shedding more than $23 billion in value
Mark DeCambre – MarketWatch
Did Jamie Dimon obliterate bitcoin’s buzz?
Bitcoin and other digital currencies have been getting absolutely toasted in recent trade, with some wondering if withering criticism from Wall Street heavyweights, like J.P. Morgan Chase’s JPM, -0.30% CEO, and growing regulatory scrutiny in China have finally combined to exact a punishing, and lasting, toll on one of the most bubblicious segments of finance.

U.S. Inflation Picks Up, Ending Five-Month Streak of Misses
Sho Chandra – Bloomberg
Inflation may finally be getting back on track to reach the Federal Reserve’s goal, as the U.S. cost of living accelerated following a weak stretch of readings, Labor Department data showed Thursday.

Exchanges and Clearing

Intercontinental Exchange Announces Volume Record in MSCI Index Futures, Surpassing 1.1 Million Contracts and Launch of New MSCI Futures
Intercontinental Exchange
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced a daily volume record of 1,100,337 contracts, set on September 11, 2017, for the suite of MSCI Index futures contracts that trade on ICE Futures U.S. The previous record was 867,337 contracts set on June 12, 2017.

Regulation & Enforcement

CME chief, eyeing Europe, says Dodd-Frank was best thing for markets
John McCrank – Reuters
U.S. regulations enacted after the financial crisis will likely be revisited and watered down but not eliminated in their entirety, in part because they give much-needed clarity to market participants, the head of CME Group (CME.O) said on Tuesday.
The sweeping 2010 Dodd-Frank Wall Street Reform law had a chilling effect on some areas of the U.S. market, as its authors intended, and critics say it is overly restrictive and should be eliminated.

Blockchain and Cryptocurrency: The Emerging Regulatory Framework
This summer, US and international regulators have brought enforcement actions, issued guidance and explanatory documents, and sharpened previously-taken positions regarding regulation of cryptocurrency and crypto-tokens under the anti-money laundering, derivatives, securities, and tax laws. These actions provide a better sense of the way in which US regulators will approach the blockchain and digital asset space going forward, but also leave many unanswered questions.


Bitcoin: Margin Trading, Contracts and More Ways to Short It
Jeff John Roberts – Fortune.com
The CEO of J.P. Morgan this week called bitcoin a “fraud” and “worse than tulip bulbs.” If you agree, it may be tempting to bet against the digital currency. Sure, the price has taken a beating of late but it’s still up 400% from January ($3,850 as of Thursday) —offering an opportunity for bitcoin bears.

How much risk are you taking?
Hazard reduction is an important and often overlooked part of investing. Markets have a tendency to move between states of fearing the future where people believe there is no justification for being in markets (usually coincides with market bottoms), to believing that risk is easily measured and controlled. At that point the fear of missing out is all encompassing (and correlations with a market top are typically quite high).
There are several measures that we look at to give an indication of attitudes towards risk. One example is the Chicago Board Options Exchange volatility or VIX index, which is a measure of implied volatilities based on a number of S&P 500 index options.

MSCI reports fear of extreme events rising higher
George Bonne – ETF Strategy
In May, we wrote that despite the generally low market volatility that has prevailed this year, investors were paying relatively high prices for downside protection as measured by “options skew” – the difference in implied volatility between an out-of-the-money option and an at-the-money option. High skew levels indicate heightened fears of “tail risk” – the chances of unlikely but highly consequential events that could sink share prices. Low market volatility largely continued through the summer, but how has options skew behaved – has it fallen to more “normal” levels? Do institutional investors appear to be dropping or keeping their downside protection?

GBP/USD – How Much Volatility Do Options Tell Us to Expect on the BoE?
Paul Robinson – DailyFx
In the following table, you’ll find levels of implied volatility (IV) for major USD-pairs looking out over the next one-day and one-week time-frames. Using these levels, we’ve derived the range-low/high prices from the current spot price within one-standard deviation for specified periods. Statistically speaking, there is a 68% probability that price will remain within the lower and upper-bounds.


Is bitcoin another tulip craze or a legitimate investment?
Thomas Heath – Chicago Tribune
Every instinct as an investor tells me to stay away from bitcoin, the online “crypto” currency invented by some mystery man and criticized by JPMorgan Chase chief executive Jamie Dimon on Tuesday as a “fraud.”
Dimon, one of the most powerful voices on Wall Street, said he would fire anyone trading in it because it’s “stupid.”

Top 10 richest US investors
Jonathan Dyble – Business Review USA
The investment and finance industry is one that hosts a significant number of the wealthiest people in the United States.
Almost a quarter of the names on the Forbes list of richest Americans work within the industry, all with billion-dollar net worths.
Here are the top 10 richest names that make the list.

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