Observations & Insight
FIA Expo: 2020 Was a Very Good Year – for ICE
Sarah Rudolph – John Lothian News
Far from being felled by the COVID pandemic – or anything else that has happened in 2020 – the Intercontinental Exchange had its best year in history in revenue and earnings and made its largest acquisition deal ever – which is saying a lot – by buying Ellie Mae two months ago.
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FIA Expo 2020: Overview of Innovator Pitches
Matt Raebel – John Lothian News
The Innovator’s Pavillion is one of the most intriguing parts of FIA – a small, curated collection of starry-eyed startups aspiring to make their mark. On the first day of FIA’s virtual Expo-V conference, each of nine companies had the opportunity to give pre-recorded “demo day” style presentations to FIA Expo attendees before their “virtual booths” opened on Day 2. These presentations included Q&A rounds from judges.
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Stock Bulls May Soon Be Emboldened by VIX’s Drop to Key Level
Joanna Ossinger – Bloomberg
The S&P 500’s so-called fear gauge is dropping toward levels that could further encourage stock bulls after a $2.6 trillion rally in the equity benchmark so far this month.
The Cboe Volatility Index — or VIX — has dropped 16 points since late October to about 24, as expectations for market gyrations ebbed following the U.S. election and news of a promising coronavirus vaccine. The VIX remains above its lifetime 19.5 average amid risks such as the still-escalating pandemic and U.S. transition to power.
Growth-Stock Scare Looking Like a False Alarm to Options Market
Michael P. Regan – Bloomberg
The options market is casting doubt on the idea that the plunge in growth stocks that started the week is the beginning of a painful rotation out of the sector that drove the years-long rally in U.S. equities.
When looking at three-month options on the exchange-traded fund tracking the Nasdaq 100 Index, the spread in implied volatility hasn’t moved much between puts protecting against a 10% drop and calls that benefit from a 10% increase. The metric known as skew remains at less than 10 — below this year’s average and about where it started 2020, before the Covid-19 pandemic roiled markets. Option skews on other growth and technology ETFs are sending a similar message.
SoftBank racks up $3.7bn in losses at tech stock trading unit
Kana Inagaki and Robert Smith – Financial Times
SoftBank has lifted the lid for the first time on “SB Northstar”, the new unit set up to play the market in tech stocks, and revealed that it has racked up trading losses of $3.7bn so far.
Until now, SoftBank has shrouded the unit in secrecy, declining to say who was in charge of the unit or what its decision-making process was, after the FT revealed that it was the so-called “Nasdaq whale” buying billions of dollars of derivatives on US tech stocks over the summer.
The stock market’s fear gauge is approaching a key technical level that could signal further upside for equities, Fundstrat’s Tom Lee says
Matthew Fox – Markets Insider
A continued collapse in the Cboe’s Volatility Index, or VIX – commonly referred to as the stock market’s fear gauge indicator – could suggest further upside ahead for equities.
That’s according to Fundstrat’s Tom Lee, who observed in a note on Thursday that the measure is on the verge of falling below 20, which would be the first time since the start of the pandemic that it fell below that key level.
‘Unprecedented’ selloff in hot-streak stocks could become ‘self-fulfilling prophecy,’ says quant who warned of Monday’s rotation
Sunny Oh – MarketWatch
Last week, Yin Luo warned money managers were vulnerable to a temporary but violent rotation from popular growth stocks to beaten-down value shares.
On Monday, Luo was answering calls until midnight from clients in the U.S., Australia, and Singapore on the very scenario he described, following Pfizer and BioNTech’s announcement that its COVID-19 vaccine candidate was more effective than many had anticipated.
Exchanges and Clearing
Cboe Introduces New Target Outcome Indices on Russell 2000 Index
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today announced that Cboe Global Indices, LLC has expanded its family of Target Outcome Indices with the addition of two new series of indices tied to the Russell 2000 Index: the Cboe Russell 2000 Enhanced Growth Index Series (RPEN) and Cboe Russell 2000 Buffer Protect Index Series (RPRO).
Regulation & Enforcement
BoE’s Cunliffe says COVID-19 market volatility to prompt global reforms
Huw Jones – Reuters
Global regulators will set out potential reforms to markets and funds after stresses surfaced during extreme market volatility in March as many countries were entering pandemic lockdowns, Bank of England Deputy Governor Jon Cunliffe said on Thursday.
A pending review from the Financial Stability Board, a body that includes central banks and regulators from the Group of 20 Economies (G20), will outline how funds and markets fared in March, Cunliffe said in a speech.
R.J. O’Brien Selects Broadridge to Transform its Exchange-Traded Derivatives Operations Globally
Broadridge Financial Solutions, Inc. (NYSE:BR), a global Fintech leader, today announced that R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, has selected Broadridge’s post-trade platform to deliver transformational levels of efficiency across its global exchange-traded derivatives operations.
How to Play the Value-Stock Boomlet—While It Lasts
Steven M. Sears – Barron’s
America rarely has been so politically divided, and the stock market has rarely been happier.
Despite a horribly divisive election—and contested results—the Dow Jones Industrial Average is within striking distance of passing 30,000. If the milestone is achieved, it would let the world know that America’s economy is still one of the most powerful in the world, even if our political house is behaving like a banana republic.
Wall Street is not overly worried Trump can overturn election
David Randall – Reuters
U.S. stock investors have expressed concerns that President Donald Trump’s effort to contest the U.S. election without evidence could roil markets temporarily, but few appeared seriously worried that challenges to the results will succeed.
Ahead of the election, analysts had said a key risk to financial market stability was the possibility that Trump would contest the result if he lost, or refuse to leave office.