Observations & Insight
Buck Haworth, Mo Guilfoile, JB Mackenzie, Nancy Stern, Hollis Griffin, Thomas Jordan and Jan Waye.
The Spread: Remembering Joe Sullivan
This week on The Spread, a binary options fraudster is charged by the CFTC, the father of the VIX publishes a paper on leveraged ETPs, and we take a moment to remember the remarkable life of Joseph Sullivan.
Hedge Funds Cut Bullish Euro Bets at Fastest Pace Since February
Masaki Kondo – Bloomberg
Hedge funds are trimming bullish euro bets at the fastest pace in eight months as a resurgence of coronavirus infections in Europe damps the growth outlook.
Leveraged funds reduced net long euro positions by a total of 20,870 contracts in the two weeks ended Oct. 13, according to data from the Commodity Futures Trading Commission on futures and options.
Hedge funds see OPEC+ offsetting recession risk
John Kemp – Reuters
Hedge funds are reducing their risk exposure to crude oil and refined products against a backdrop of increasing uncertainty over a resurgence in the coronavirus and potential double-dip recession.
However, fears over the impact on oil consumption are offset by the growing likelihood that OPEC+ will postpone its output increase scheduled for the start of next year and signs that refiners are reducing excess stocks of distillates.
Many stock investors are too young to remember Black Monday in October 1987 — why that’s a problem
Mark Hulbert – MarketWatch
At some point over the next century, the stock market will lose more than 20% of its value in a single day. Maybe this doesn’t seem like useful advice, but the fact is that you’re kidding yourself if you think market crashes of such magnitude won’t happen again.
This sobering thought coincides with the 33rd anniversary of the 1987 U.S. stock market crash. On Oct. 19, 1987 — Black Monday — the Dow Jones Industrial Average lost 22.6%. It was the worst one-day percentage drop in U.S. stock market history. If a similarly-sized crash were to occur today, it would take about 6,500 points off the Dow in just one trading day.
Exchanges and Clearing
All Major Exchanges are Not Created Equal
Jeff Bacidore – TABB Forum
How do market participants know the value that an exchange provides? That’s the central question that trade execution consultant Jeff Bacidore asks in this piece. An exchange’s value to the marketplace is more than its trading volume, he explains.
HKEX Derivatives Suite Reaches a New Milestone
As a world-leading service provider for the global investment community, MSCI’s equity indexes are tracked by more than US$13 trillion* of assets worldwide. In a significant licensing agreement, HKEX plans to introduce 37 MSCI equity index futures and options contracts based on a suite of indexes on Asia and Emerging Markets**. This collaboration further anchors HKEX and MSCI’s commitment to their long-term product development and innovation programme in the region.
Euronext Stock Trading Resumes After Three-Hour Technical Outage
Albertina Torsoli, Viren Vaghela and Jan-Patrick Barnert – Bloomberg
Trading in all stocks and derivatives on Euronext NV markets shut down for three hours, the biggest outage to hit the exchange operator in two years. Stocks including L’Oreal SA, LVMH and Kering SA in Paris were halted as of 9:49 a.m. Paris time on Monday, with Euronext markets in Belgium, the Netherlands, Portugal and Ireland also affected. Companies on those exchanges make up about 22% of the components in the benchmark Stoxx Europe 600 Index. Trading in Euronext’s other market, Norway, wasn’t affected.
Cboe Becomes Primary Listing Exchange for O’Shares ETFs
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today announced that the entire suite of O’Shares ETFs successfully transferred to Cboe BZX Exchange from NYSE Arca on Monday, October 19.
Tech’s Influence Over Markets Eclipses Dot-Com Bubble Peak; Companies that do everything from manufacturing phones to operating social-media platforms now account for nearly 40% of the S&P 500
Amrith Ramkumar – NY Times
Technology companies are set to end the year with their greatest share of the stock market ever, topping a dot-com era peak in the latest illustration of their growing influence on global consumers. Companies that do everything from manufacturing phones to operating social-media platforms now account for nearly 40% of the S&P 500, on pace to eclipse a record of 37% from 1999, according to a Dow Jones Market Data analysis of annual market-value data going back 30 years. Apple Inc., AAPL -1.40% which earlier this year became the first U.S. company to hit a $2 trillion market capitalization, accounts for more than 7% of the index on its own. Early last month, it accounted for 8% of the S&P, the largest share ever for any stock in data going back to 1998.
Moving Averages Could Tell Us Another Volatility Pop is Coming
Todd Salamone – Schaeffer’s Investment Research
Last week was a test for those playing pre-election and post-election rallies in equities, and betting on a concurrent decline in volatility. That is based on the Cboe Market Volatility Index (VIX — 27.41) signal that I referred to in last Monday’s commentary.