Observations & Insight
The Spread: Data Galore
Bitcoin mania appears to have returned stronger than ever at the moment now that the virtual coins are trading between 35 and 40 thousand dollars, depending on the day. Or the minute. I swear the cryptocurrency scene is like a zombie; as soon as you think it’s down, it gets back up and tries to sink its teeth into your brain.
Wall Street’s Bond Traders Reveal Their Limits
Brian Chappatta – Bloomberg
The “Masters of the Universe” are a lot of things, but magicians they are not.
With all of the largest U.S. banks except Morgan Stanley now having reported fourth-quarter earnings, it’s clear that bond traders struggled to meet expectations in the final three months of 2020. On Tuesday, Goldman Sachs Group Inc. disclosed fixed-income, currencies and commodities sales and trading revenue of $1.88 billion, short of estimates for $2.02 billion, even as its equities trading blew forecasts out of the water, soaring by 40%. At Bank of America Corp., FICC trading revenue was $1.74 billion, missing expectations for $2 billion. Citigroup Inc. also fell short of FICC estimates, a notable blemish given that it’s one of the larger revenue-generating groups inside the bank. JPMorgan Chase & Co. barely squeaked by, with FICC sales and trading revenue of $3.95 billion, topping forecasts for $3.92 billion.
Bitcoin (BTC USD) Slides Below $35,000 as Crypto Mania Loses Momentum
Lynn Thomasson – Bloomberg
The Bitcoin fever is starting to break as worries about a market bubble discourages investors from buying in.
Prices for the largest cryptocurrency dipped as much as 6.8% on Wednesday and traded below $35,000. Ever since the market shot through all-time highs in early January, Bitcoin has been beset by volatility and skepticism that the run-up has been excessive.
Analysis: Yellen-backed policies set to aid risk assets, raise longer-term worries
Lewis Krauskopf – Reuters
Treasury Secretary nominee Janet Yellen’s unequivocal support for a pandemic rescue plan cuts both ways for investors, fueling optimism that the rally in risk assets will continue while bolstering concerns over a massive runup in government debt.
In her Senate confirmation hearing on Tuesday, the former Federal Reserve chair urged lawmakers to “act big” on the next coronavirus relief package after President-elect Joe Biden last week outlined a $1.9 trillion stimulus proposal as part of a domestic policy agenda heavy on government spending.
Exchanges and Clearing
Financial Products News #2021 – 2 Nasdaq Announces Launch of Three New Indexes Effective Thursday, January 21, 2021
Effective Thursday, January 21, 2021, Nasdaq will begin disseminating the following new index on the Nasdaq Global Index Data ServiceSM (GIDS).
Regulation & Enforcement
Chairman Tarbert’s Tract on Self-Regulation to be Published by Northwestern University; Excerpts from Forthcoming Article in the Northwestern Journal of International Law and Business: “Self-Regulation in the Derivatives Markets: Stability through Cooperation”
“Debates about the ideal form of regulation often pose a false dichotomy, sorting regulatory efforts into two seemingly oppositional categories: governmental or private. But this division offers an overly simple account of the regulatory structures that define modern administrative law. Instead, sound regulation is, more often than not, the result of collaboration between traditional governmental functions and self-regulatory measures performed by private actors. Far from being at odds with each other, government and the private sector often work together to produce regulatory solutions that balance effective oversight with the flexibility needed to adapt to changing circumstances …
NYSE ARCA, INC. LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. 2019062979102
Susquehanna Securities, LLC ( -O by exceeding the applicable position limit in five securities on six occasions between June 2019 and September 2020. Susquehanna consents to a censure and total fine of $60,000, of which $6,000 shall be allocated to NYSE Arca.
Options Announces Direct Internet Connectivity to Frankfurt (FR2)
Global Banking and Finance Review
Options, the leading provider of cloud-enabled managed services to the global capital markets, have today announced the availability of direct, high-performance Internet connectivity to Frankfurt (FR2). This direct connectivity is an exciting addition to the Options network and service offering, allowing clients to access services hosted at Equinix Frankfurt (FR2) and other European colocation facilities. Options facilitates trading at hundreds of venues worldwide with real-time market data, direct market connectivity, and fully managed colocation services. Options industry-leading expertise in infrastructure automation, architecture, and operations provides clients with rapid time to market, TCO reduction, best-in-class performance, resiliency, and security.
Selling Stocks at All-Time Highs
Frank Kaberna – Tastytrade
There’s something attractive about selling a new all-time high in a market. Maybe it’s the rush of pretending to be Spider-Man stepping in front of a runaway train rampaging through the Upper East Side. Or it could be the potential for glory if you sell the high print and scurry off like Charlie with a golden ticket. Most likely, though, it’s simply the opportunity to sell something that’s never been this expensive before. The runaway train that could be a seller’s golden ticket is the stock market (though Bitcoin is flexing similar locomotive features). Small Stocks (/SM75) futures are up a shade under 10% in the first ten trading days of the year, and SM75 is only a few dollars away from its projected upside boundary for all of 2021.* It’s not even February yet!
2020 Annual Trends in Futures and Options Trading
Description: This webinar will highlight the main trends in trading activity in 2020 in the global exchange-traded derivatives markets, with category and regional breakdowns as well as exchange and contract rankings.
Presenter: Will Acworth, Senior Vice President of Publications, Data & Research, FIA
Time: Jan 27, 2021 10:30 AM in Eastern Time (US and Canada)
Maybe the Index Funds Don’t Vote
Matt Levine – Bloomberg
When people want to bet against a stock by selling it short, they have to borrow the stock. Short sellers borrow stocks from brokers; brokers, in turn, borrow it from big institutional long holders. Some holders are more willing to lend stock than others, and index funds are particularly willing lenders. Short sellers pay a fee to borrow stock, brokers pass the fees along to the lenders, and index funds pass them along to their investors, in the form of slightly better performance and/or slightly lower management fees. Stock-lending revenue is crucial to index funds because their basic business is about giving investors index performance at the lowest possible cost, and stock-lending revenue is one of the only ways to subsidize the cost of running an index fund.
(Podcast) Volatility Views 430: Strange Inauguration Volatility Plus Vanishing TSLA Puts
Volatility Views – Options Insider Network