Virus Fears Propel VIX to Biggest Daily Surge Since Volmageddon; Virus Risk No Longer Just a Blip on the Horizon

Feb 25, 2020

Lead Stories

Virus Fears Propel VIX to Biggest Daily Surge Since Volmageddon
Joanna Ossinger – Bloomberg
The Cboe Volatility Index surged to its highest in more than a year Monday as renewed fears about the coronavirus outbreak battered risk assets.
The VIX, also known as Wall Street’s “fear gauge,” rose 8 points to close above 25 — its biggest jump since the February 2018 “Volmageddon” meltdown. It was the third straight day of gains for the index and, in percentage terms, its seventh-biggest move ever.

Coronavirus and politics wake up sleepy markets
Philip Stafford – Financial Times
Volatility is back in markets as investors consider the impact of coronavirus on public health and global economic productivity. But the disease is not the only item on investors’ worry lists.
The Vix volatility index, nicknamed Wall Street’s “fear gauge”, soared 47 per cent to 25.03 on Monday — its seventh highest one-day rise in the past 30 years.

Virus Risk No Longer Just a Blip on the Horizon
Michael Msika and Jan-Patrick Barnert – Bloomberg
Equities just had their first real wake-up call that risks from the coronavirus could be more than just a blip. Yesterday’s selloff, the biggest in Europe since the aftermath of the Brexit referendum, put an end to optimism that the epidemic would leave only a limited economic impact that could be offset by stimulus. European equities have all but reversed gains made in February, while volatility has also spiked.

Coronavirus Is Cratering the Stock Market. Why It Can Still Get Worse.
Reshma Kapadia – Barron’s
Venice cut short its Carnival; Beijing postponed its annual legislative session in mid-March and cases of the Coronavirus in South Korea soared, with companies like Samsung temporarily closing factories. Some strategists are beginning to reassess their view that the impact of the deadly outbreak would be contained to the first quarter—now warning that markets may be too complacent.

Citadel Securities Expands an Already Dominant Options Business
Liz McCormick – Bloomberg
Ken Griffin’s Citadel Securities, already a giant in trading U.S. stock options, has a plan to gobble up even more market share in this key derivatives business. The market maker has assembled a seven-person team, led by former Deutsche Bank AG Managing Director David Silber, to win order flow from institutional investors. Launched in January, the venture buys and sells exchange-traded options tied to individual U.S. stocks and equity indexes on behalf of those customers.

If the coronavirus isn’t contained, a severe global recession is almost certain
Rex Nutting – MarketWatch
The world woke up Monday to the reality that the coronavirus epidemic is going to have a much bigger impact on the global economy than investors and policy makers had assumed. Just how big, no one really knows.
Last week, it seemed as if financial markets believed that COVID-19 would be contained. But new cases in Italy, South Korea and Iran over the weekend undermined that belief. The World Health Organization tried to reassure the public on Monday, saying the disease was not yet a pandemic because it was not spreading in an uncontained way.

Oil funds’ first wave of virus-selling loses momentum
John Kemp – Reuters
Hedge funds again sold petroleum last week as fears about a coronavirus-driven recession intensified, but the rate of sales decelerated for the third week running.
The slowing rate of sales indicated the wave of long liquidation and short-selling might have been nearing a conclusion, until further evidence of coronavirus transmission outside China emerged later in the week.


EEX Group Press Release – EEX Group and Nasdaq Futures, Inc. (NFX) successfully complete transfer of Freight business
EEX Group (news release)
EEX Group has successfully completed the migration of Freight Open Interest from Nasdaq Futures, Inc. (NFX) to European Commodity Clearing (ECC), EEX Group’s clearing house. Following the third and final matching session, a total of 143,784 lots of Freight Open Interest, which equates to approximately 90% of the entire NFX Freight portfolio, has been migrated from NFX’s clearing house Options Clearing Corporation (OCC) to ECC.


ADSS Onboards Aaron Brown to eFX & CFDs Institutional Sales
Aziz Abdel-Qader – Finance Magnates
Abu Dhabi headquartered international brokerage ADSS has just announced its latest appointment, this time on-boarding Aaron Brown as a senior executive at eFX & CFDs institutional sales desk. Brown joins ADSS with fifteen years of experience to enhance its institutional sales team in Europe markets, with the group eyeing a broader focus and growth in the region. Prior to landing at the middle-east focused broker, Brown spent five months as vice president of institutional sales of eFX & CFDs at CFH Clearing Limited, preceded by one year at Global Market Index Limited (GMI), where he held an analogous role from August 2018 to July 2019.


The S&P 500 has to hold this level or risk a 10% correction, warns strategist
Barbara Kollmeyer – MarketWatch
Those pinning hopes on a rebound for stocks after Monday’s brutal equity selloff are in for a nervous day.
Stocks are attempting to rally after a choppy morning and New York traders are waking up to find coronavirus headlines are no less worrying on Tuesday. It may just be too soon for some investors to take up Monday’s advice from Berkshire Hathaway’s Warren Buffett, who suggested they could use a selloff to buy a stock they like for even cheaper.
In short, it takes a “brave soul to be buying these markets,” notes Chris Weston, head of research at Australian forex broker Pepperstone, who provides our call of the day.

Gold Futures Options Trade From Tom Thornton
Bloomberg (VIDEO)
In this edition of “Charting Futures,” Tom Thornton, Hedge Fund Telemetry founder and president, examines gold futures with Bloomberg’s Abigail Doolittle on “Bloomberg Markets: The Close.”


Five Views on How Hard It Was to Trade Stock in Monday Meltdown
Vildana Hajric and Sarah Ponczek – Bloomberg
It’s a perennial villain, bad liquidity. Veteran traders have been warning that a breakdown in the stock market’s ease-of-use would one day have dire consequences for pricing. So how easy was it to do business Monday, during the worst sell-off in two years?

It Took Just Two Days to Zap More Than $1 Trillion From Stocks
Sarah Ponczek – Bloomberg
Comeuppance has been swift for a market that has occasionally seemed indestructible. In just two days, U.S. stocks have lost more than $1 trillion in value. Gone is a year-to-date gain in the S&P 500 that only five days ago had swelled to nearly 5%. Where once the Nasdaq Composite Index was heading for its best February in two decades, now it’s barely green for the month. The VIX hasn’t been this high since the Christmas Eve meltdown of 14 months ago.

The Only 13 S&P 500 Stocks That Rose on Monday
Nicholas Jasinski – Barron’s
Monday was the worst day for the U.S. stock markets in two years. The S&P 500 index lost 3.4%, erasing its 2020 gains and more. All 11 of its sectors declined, led by energy’s 4.6% drop. A sharp rise in coronavirus cases and deaths outside of China had investors worried about the potential impact on global supply chains and consumer demand.

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