Lead Stories

U.S. Stocks Rebound as Ukraine Optimism Overshadows Iraq
Elena Popina – Bloomberg
U.S. stocks rebounded, with the Standard & Poor’s 500 Index erasing a decline for the week, as signs that tensions are easing in Ukraine outweighed concern over crises in the Middle East.
Gap Inc. advanced 5.8 percent as the retailer’s earnings and revenue topped estimates. Coach Inc. added 4.2 percent to lead a rally in apparel companies. Zynga Inc. tumbled 5.7 percent after cutting its full-year outlook. News Corp. slid 2.4 percent after fourth-quarter earnings missed estimates as the company struggled in its transition from print to digital.
http://jlne.ws/1nAdBGI

Loeb Sees ‘Decisive’ Economic Data Spurring Fed Action
Noah Buhayar – Bloomberg
Billionaire hedge-fund manager Dan Loeb is betting that the Federal Reserve will act sooner rather than later as the U.S. economy rebounds.
“We believe Q3 economic data will be decisive and likely drive action by the U.S. Fed during the second half of the year,” Loeb said today on a conference call discussing results at Third Point Reinsurance Ltd., the Bermuda-based company that counts on his hedge fund to oversee its investment portfolio.
http://jlne.ws/1nAikIs

Next Week in Weeklys – 8/8/2014
Russell Rhoads – CBOE Options Hub
First off, I’m well aware next week is standard August option expiration week so every company that reports has short dated options available for trading. However, with Hannah heading back to college (USC’s gain and The Options Institute’s loss), gathering all that data would probably take a couple of days. Therefore the list of stocks below is the twenty two companies that have been consistently on the Weeklys list that are reporting earnings.
http://jlne.ws/1nAjLX8

Dilbert Creator: Dump Your Advisor, Own Index ETFs – Focus on Funds
Brendan Conway – Barron’s
Scott Adams, creator of the Dilbert cartoon series, turns out to be no fan of professional financial advisors.
Here’s what he wrote on his blog a few days ago. This caustic criticism, which I’d argue is mostly justified, is making the rounds on CNBC and other financial media Friday:
http://jlne.ws/1nAhlb1

VIX: Crystal Ball, or Rearview Mirror?
Adam Warner – Schaeffer’s Investment Research
There was a spirited debate between the “Fast Money” halftime show guys the other day regarding the value of the CBOE Volatility Index (VIX).
http://jlne.ws/1nAhLy5

Why the VIX Is Set to Spike Even Higher
www.thestreet.com
With the VIX “fear index” still wallowing in the teens and the S&P 500 relentlessly making new highs, “complacency” has been the word most commonly thrown around this year to describe the stock market.
http://jlne.ws/1nAiWOe

Videocast: VIX living at new level
optionMONSTER
http://jlne.ws/1nAiPSC

Ex-Microsoft employee gets two years in prison for insider trades
Today Online
SEATTLE – A former Microsoft Corp employee was sentenced to two years in prison on Friday for his part in an insider trading scheme that netted him and his partner more than $400,000.
Brian Jorgenson, 32, had pleaded guilty to securities fraud for his part in a sophisticated operation in which he passed private information he gleaned from his job as a corporate finance manager at Microsoft to a former colleague who traded stocks and options.
http://jlne.ws/V8xBsW

Exchanges

Canadian Exchange Operator TMX Swings to Loss
TMX Took a Charge Related to Lower Revenue Projections from Its U.S. Subsidiary
Judy McKinnon, The Wall Street Journal
TORONTO— TMX Group Ltd. X.T -1.50% , Canada’s flagship exchange operator, late Thursday said it swung to net a loss in the second quarter, after taking a noncash impairment charge to reflect lower revenue projections from its BOX Options Exchange LLC subsidiary in the U.S.
http://jlne.ws/1oqGpq3

CME Group to conduct industry outreach on CME livestock hours
CME Group  Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will begin the process of conducting broad outreach to customers, producer groups and other market participants to review existing CME livestock trading hours on CME Globex.
http://jlne.ws/V8zaXE

Regulation and Enforcement

U.S. government charges ex-ConvergEx CEO over trading fees
Reuters
The U.S. government filed criminal and civil charges against the former chief executive at one of ConvergEx Group LLC’s brokerage units on Thursday, saying he was responsible for deceiving customers with hidden fees.
http://jlne.ws/1nAdWcm

To prepare for regulatory changes, traders must think like a marathoner and not a sprinter.
Mark D. Knoll – Traders Magazine
In an industry dominated by speed, where short-term success is dependant on decisions made faster than the blink of an eye, getting traders to focus on the long-term impact of regulatory changes is like trying to get a world class sprinter to think like a marathon runner.
Sure, both pursuits involve the simple act of placing one foot in front of the other, but winning at either discipline requires completely different approaches. Day-to-day, the buyside sprinter is focused on the short-term – reacting to market signals, identifying liquidity, testing prices, and monitoring execution quality. In contrast, successful firms adapt to the ever-changing regulatory environment using a marathoner’s mindset. Marathoners study their route months in advance, know where the hills are, know where the water stops are, and plan a strategy for miles twenty-four through twenty-six as much as they do miles one through five.
http://jlne.ws/1nAdhb1

Goldman Sachs says alternative trading system being investigated
Reuters
Goldman Sachs Group Inc (GS.N) said it was being investigated for its U.S. alternative trading system and for the potential misuse and circulation of non-public information related to its corporate developments.
http://jlne.ws/1nAfenO

SEC Computer Called CAT Will Peer Into Dark Pools, Track Orders
Matthew Philips and Silla Brush – Bloomberg
Around 2:30 p.m. on May 6, 2010, the U.S. stock market began to crash. It fell 600 points in five minutes, erasing about $800 billion in value. The market largely rebounded by day’s end, but investors were spooked.
It took the U.S. Securities and Exchange Commission more than four months to piece together what had happened: A single trader’s order to unload $4 billion in futures contracts caused a price dip that set off a cascade of automated selling.
http://jlne.ws/V6WbdI
***JB: I for one welcome our robot overlords (getting ahead of the game in case they are reading this).

Strategy

Oppenheimer’s Wald: Rise in VIX Is a Buy Signal
Dan Weil – MoneyNews
Last week’s 2.7 percent drop by the S&P 500 index was accompanied by a rise in the CBOE Volatility Index (VIX) to a three-month high.
You might think that’s a bad sign for stocks, but it’s not. In the last year, the VIX has jumped 50 percent or more from its lows four times, just as it has now, CNBC and Yahoo’s Talking Numbers reports. And on each of those occasions, stocks gained shortly afterward.
http://jlne.ws/1nAj5Bl

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