INTL FCStone Financial Launches Prime Brokerage Division; Trading Lull Engulfs Stocks and Commodities

Apr 23, 2019

Lead Stories

INTL FCStone Financial Launches Prime Brokerage Division
INTL FCStone Inc. today announced that its subsidiary, INTL FCStone Financial (“INTL” or “the Company”), has launched a prime brokerage division, offering multi-asset prime brokerage, execution, outsourced trading, custody, and self-clearing and introduced clearing services for hedge funds, mutual funds, and family offices.

****SD: FCStone making moves of late. Recall the recent news, via MarketVoice – INTL FCStone accelerates growth in Asia-Pacific with Singapore deal.

Trading Lull Engulfs Stocks and Commodities
Amrith Ramkumar – WSJ (SUBSCRIPTION)
An unusual period of calm has blanketed trading of stocks and commodities in recent days, befuddling some analysts who had expected activity in riskier assets to pick up at the start of first-quarter earnings season.

****SD: From the FT – Tranquillity reigns but markets are scarred by last year’s mayhem. Also, via MarketWatch, FX volatility is at its lowest levels since 2014. A ZeroHedge post has this to add – “This is the biggest drop year-to-date [in the VIX] and the biggest 17-week collapse in risk since records began (in the last ’80s).”

Anniversary Week at Cboe
Cboe Blog
Friday marks Cboe’s 46th anniversary and we’re celebrating all week with some of our favorite memories and moments. Follow the fun with #Cboe46 on your preferred social platform, or check out our Instagram page for stories and opportunities to vote on your favorite Cboe button throughout the decades.

****SD: Two recollections mentioned in the blog – at the time it first came out, faxing was super cool and competitions on the floor frequently involved White Castle sliders. I’m looking forward to what sorts of nostalgic bits and pieces Cboe will put out there this week.

Oil Gauges Turn Bullish as Trump Doubles Down on Iran Sanctions
Alex Longley – Bloomberg (SUBSCRIPTION)
Brent options flip to call bias, WTI time-spreads surge; U.S. said it will cancel waivers on Iranian sanctions
Crude market gauges suggest oil traders are betting on further price increases after the Trump administration’s decision to halt waivers from U.S. sanctions on Iran.
Options traders are paying a premium for bullish call options, while time-spreads that provide a measure of market strength have soared after Trump’s latest move to try to drive the Persian Gulf state’s oil exports to zero actually stoked positive market sentiment, despite his well-chronicled distaste for high oil prices.

Robinhood angered banks. Now it wants to be one
Hannah Lang and Rachel Witkowski – American Banker (SUBSCRIPTION)
The fintech brokerage Robinhood was forced to rebrand its cash management product last year after misleading marketing caused a backlash among bankers and others. But now, the Menlo Park, Calif., company has mounted an even more ambitious effort: applying for a full-fledged bank charter.

****SD: In case you missed it at the end of March, check out Alphacution’s blog Robinhood: Payments for Order Flow 2018, Up 227%.

Exchanges and Clearing

Virginia Beach bitcoin mining company that won $500,000 city grant files for bankruptcy
Kimberly Pierceall – Virginia Pilot
BCause LLC, a cryptocurrency mining operation that expanded to a server farm in Virginia Beach over a year ago with help from a city grant of up to $500,000, has filed for bankruptcy protection along with its subsidiary BCause Mining LLC.

***SD: Bcause was supposed to be a one stop shop for spot, futures, and options on futures.

In perspective (part III): Tackling China’s capital markets
Eurex Exchange
The third part of this series of article puts China and the development of its capital market in perspective. The development itself is not new – new is the speed in which it has been happening over the last years. The changes we see are impressive.


In the Race for Front-to-Back, Integration Makes All the Difference
Klaus Holse, SimCorp – TABB Forum
Buy-side firms are now seeing the benefits of multi-asset, end-to-end solutions. With increased volumes of data and the complexity of alternative instruments, the need to consolidate fragmented, inhibiting and costly investment operations is now mission critical. And in the current competitive market, it is paramount that the buy side choose investment technology that provides the best scale and automation, says SimCorp CEO Klaus Holse.


Earnings ‘Beats’ Don’t Help a Stock as Much as They Used To
Alexandra Scaggs – Barron’s
Investors have been difficult to impress this earnings season.
Take it from Goldman Sachs (ticker: GS), whose shares fell 3.8% after it reported first-quarter profits that beat analysts’ forecasts.
Or International Business Machines (IBM), which reported higher earnings than Wall Street expected, only to watch its shares slide 4.2%. Or look at FedEx (FDX). Its earnings of $3.03 a share were only five cents below estimates—but the stock dropped 3.5% anyway.
The bottom line is that investors are raising their standards after December’s volatility and market signals this year pointing to a recession.

Amazon Stock Options to Play Ahead of Earnings
Steve Sears – Barron’s
Trading options on pays well or kills well. That is because the stock fetches about $1,800 per share.
Anyone on the right side of an Amazon (ticker: AMZN) options trade makes a mint because premiums on options that are 5% or 10% away from the stock price are unusually large. The April $1,800 put that expires April 26, for example, is trading around $15. Most investors are happy to make $1 selling options, and thrilled to make a few dollars.

Stock trades, earnings season: Simple strategy to make 42% in 6 days
Joe Ciolli – Business Insider Prime (SUBSCRIPTION)
If there was ever an earnings season to unveil a shiny new stock-market trading strategy, this is the one.
So says Goldman Sachs, which notes that price swings and opportunities abound as we get into the meat of quarterly reports. The firm says untapped potential is likely to result from what’s been a turbulent path over the past four months.

****SD: Here’s the strategy: “An investor buys the first out-of-the-money call contract on a stock five days ahead of earnings and then sells it one day after the report… According to Goldman, the trade returned a whopping 42% last quarter.”

Markets underplaying Brexit risk of UK government imploding, strategist says
Elliot Smith – CNBC
Investors are underestimating the potential for the U.K. government to “implode,” resulting in a snap general election, a senior foreign exchange strategist told CNBC.
Sterling volatility has fallen sharply in recent weeks after Brussels and Westminster agreed to delay Britain’s departure date by up to six months, removing any immediate risks of a no-deal Brexit. Such an eventuality would have hit the pound by as much as 10%, according to Jeremy Stretch, the head of G-10 currency strategy at CIBC.

Citi Says `Be Brave’ in Volatility and Buy Argentine Stocks
Carolina Millan and Vinicius Andrade – Bloomberg (SUBSCRIPTION)
Brace for short-term volatility and buy Argentine stocks, Citigroup says.
The market has under-priced the odds for policy continuity in the coming years, Citi analysts wrote, reiterating their overweight rating for Argentina stocks. To the analysts, Argentina’s next government will likely support the country’s $56 billion loan from the International Monetary Fund, which is the “key for equities to work.”

Tesla traders are stocking up on ‘crash protection’ ahead of the electric-car maker’s Q1 results
Markets Insider
Bets against Tesla are mounting ahead of the electric-car maker’s highly anticipated first-quarter earnings, due out Wednesday.

Striking Pairs: Equity Indices
Sage Anderson – tastytrade blog
Today, we are taking another look at equity index pairs. However, in this case, we are focusing not on the options of these products, but the futures. Today, the “pair” refers to price relationship from a directional perspective, as opposed to volatility.


Funds set new bearish benchmark across CBOT grains and oilseeds
Karen Braun – Reuters
Speculators reached record levels of bearishness in Chicago-traded grain and oilseeds last week as global supplies continue to expand in the absence of any serious threats to crops on the horizon. Commodity funds were net sellers across the board last week and they have not changed their minds in the days since.

Franc Heading for a 2% Monthly Decline Means SNB ‘Sleeps Easier’
Anooja Debnath – Bloomberg (SUBSCRIPTION)
Slump in volatility damps demand for haven currencies; Options signal least bullish franc sentiment since May 2018

Ratio of small-caps and gold shows that stock-market fortitude trumps fear
Rachel Koning Beals – MarketWatch
There is little surprise that stock investors are jittery as the U.S. extends the longest U.S. economic expansion on record and after a stratospheric 330% stock-market gain during the run, including an almost 17% year-to-date total return.
Bulls insist this economic and market expansion is built like no other, meaning that its demise won’t come about in a way that has taken down past bullish phases.

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