Seeing red: tricky times in the markets
Stefan Wagstyl – Financial Times
As investors we like to think we’re acting rationally, even though there are mountains of evidence to show that, all too often, we’re not.
A successful day at the office — clinching a contract or hitting a sales target — can make us overconfident about our own finances. A bad day can have the opposite effect. Strongest of all is the well-documented herd instinct, which drives even hard-headed professional fund managers to move as a pack.
Machine learning futures algo trading surges at JPMorgan; Peter Ward, global head of futures and options electronic execution at JP Morgan, tells Hayley McDowell that buy-side adoption of its reinforcement learning FICC futures algorithms has surged in recent years, accelerated by the market volatility in 2020.
Hayley McDowell – The Trade
Growth in fixed income futures algorithmic trading at JP Morgan has accelerated rapidly in 2020 as buy-side traders globally turned to the investment bank’s machine learning-equipped algos to grapple with intense market volatility. Speaking to The TRADE, Peter Ward, global head of futures and options electronic execution at JP Morgan, explains that while the volatility contributed to recent growth, adoption of futures algo trading has picked up pace with clients significantly in the last
How Bill Hwang of Archegos Capital Lost $20 Billion in Two Days
Erik Schatzker, Sridhar Natarajan, and Katherine Burton – Bloomberg
Before he lost it all—all $20 billion—Bill Hwang was the greatest trader you’d never heard of.
Starting in 2013, he parlayed more than $200 million left over from his shuttered hedge fund into a mind-boggling fortune by betting on stocks. Had he folded his hand in early March and cashed in, Hwang, 57, would have stood out among the world’s billionaires. There are richer men and women, of course, but their money is mostly tied up in businesses, real estate, complex investments, sports teams, and artwork. Hwang’s $20 billion net worth was almost as liquid as a government stimulus check. And then, in two short days, it was gone.
Gold Has Gotten Crushed. Why That’s About to Change.
Myra P. Saefong – Barron’s
After suffering its biggest quarterly loss since 2016, gold stands as one of the few commodities trading lower this year. But prices still have room to run higher even if the global economy continues to recover and the pandemic moves closer to an end.
“Gold has played its typical role as an insurance against market disruption and as a haven asset,” says Frederic Panizzutti, head of institutional and central bank sales at precious metals trader and refiner MKS.
Exchanges and Clearing
Cboe Options Exchange to Extend Global Trading Hours for VIX and SPX Options to Nearly 24 Hours a Day
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, announced plans to extend the global trading hours session (GTH) for its S&P 500 Index options (SPX) and Cboe Volatility Index (VIX) options to nearly 24 hours each business day on Cboe Options Exchange in the fourth quarter of 2021, subject to regulatory review.
Cboe’s move to offer a nearly 24 hours-a-day, five days-a-week (24×5) trading model aims to provide global market participants with expanded access to trade Cboe’s exclusively listed U.S. index options products based on the S&P 500 Index (SPX), the global benchmark of large-cap U.S. equities, and the Cboe Volatility Index (VIX), recognized as the world’s premier gauge of U.S. equity market volatility. The lengthened global trading hours are designed to help meet growing investor demand for the ability to manage risk more efficiently, react to global macroeconomic events as they are happening and adjust SPX and VIX options positions around the clock.
Regulation & Enforcement
Federal Court Orders Alabama Company and its Owner to Pay Over $1.1 Million for Commodity Pool Fraud
The Commodity Futures Trading Commission today announced that Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama entered a default judgment against Negus Capital Incorporated (NCI) of Muscle Shoals, Alabama finding that it, through its owner Aaron B. Butler, engaged in fraudulent solicitation, misappropriation, and registration violations in connection with binary options trading.
US Senate banking chair queries Credit Suisse and other banks on Archegos
Lauren Fedor – Financial Times
The chair of the US Senate banking committee has written to four major banks, including Credit Suisse and Nomura, seeking answers about the implosion of Archegos Capital, in a sign that lawmakers in Washington are ramping up scrutiny of family offices and their lenders.
Sherrod Brown, the Democratic senator from Ohio who chairs the powerful committee, on Thursday sent letters to Credit Suisse, Nomura, Goldman Sachs and Morgan Stanley asking for detailed explanations of their dealings with Bill Hwang’s Archegos and family offices more broadly. Brown gave the lenders two weeks to reply to his request.
GameStop ($GME) Plans to Make Activist Ryan Cohen Chairman; Shares Rise
John J Edwards III – Bloomberg
GameStop Corp. climbed after saying it intends to elect Ryan Cohen as its next chairman, cementing the activist investor’s influence at the video-game retailer.
Kurtis Wolf resigned effective April 5, GameStop said in a filing Thursday. The company said the resignation didn’t result from a disagreement over operations, policies or practices.
Why the S&P 500 is now overbought and looks ready to drop in the short term, according to this strategist
Jack Denton – MarketWatch
The S&P 500 eked out yet another record close on Wednesday, as the Federal Reserve reassured investors that it is in no rush to tighten fiscal policy — and that momentum has continued into Thursday.
But it may not last for long.
Opinion: Continue to ride the stock market’s bullish momentum
Lawrence G. McMillan – MarketWatch
The S&P 500 index broke out to new all-time highs on April 1, and then backed it up with an even stronger upside move on the next trading day. This move was accompanied by decent internal strength, too, although as you will see, there are some potential problems developing.
There should now be support for the S&P SPX, 0.35% at the most recent highs – around 3985. A move back below that level right now would be disappointing but wouldn’t break the uptrend in the chart. There is further support at 3850-3870, and a breakdown below there would change the chart from bullish to at least neutral – and possibly bearish. SPX bounced off that support area on March 25 and hasn’t looked back since.
Striking Price: Citigroup Stock Looks Like a Good Bet. How to Play Its Earnings With Options.
Steven M. Sears – Barron’s
First-quarter earnings season is about to begin—and investors with long-term horizons should consider using short-term options strategies to take advantage of spreading exuberance—starting with Citigroup.
Anticipation is especially high for banks and brokerages, which are expected to benefit from perhaps the best of all possible worlds for their businesses.
Jamie Dimon’s four reasons why working from home isn’t great
Sarah Butcher – eFinancialCareers
JPMorgan still has a lot of its staff working from home, and it will still have plenty of people working from home in future. Writing in the banks’ shareholder letter that prefaces its new annual report, JPMorgan CEO Jamie Dimon says the bank will in future only maintain seating space for 60% of its employees.
Just 10% of JPM staff will work from home permanently in the future, says Dimon. Some work will work in a hybrid fashion, both at home and in the office. Others will work in either offices or branches all the time.