| December 10, 2018 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
The Spread - A "Complete Guide" - 12/7
JohnLothianNews.com
JLN discovered a copy of "The Complete Guide to Options Selling," authored by the guys behind the now defunct "hedge fund" OptionSellers. It's interesting to read in hindsight.
The Spread is sponsored by MIAX
Watch the video and see the stories referenced here »
| | | | | | Lead Stories | | | Oil's Sharp Swings Are a Symptom of a Changing Market; 'What would have happened in one week is happening in one day,' one executive said
Stephanie Yang - WSJ (SUBSCRIPTION)
Computerized trading is playing a greater role in the oil market, helping to amplify the volatility that has accompanied crude's recent downward lurch. While geopolitical tensions and economic concerns have sent oil prices spiraling, analysts and traders say the shifting makeup of the market has exacerbated swings, with traditional players like supply-and-demand focused hedge funds, market makers and banks scaling back.
/goo.gl/WuApBe
Brexit is a test like no other for currency traders
Simon Derrick - Financial Times (SUBSCRIPTION)
This is hardly the first time in the past 30 years that the foreign exchange market has had to deal with potential shocks  both positive and negative  for the pound. Unlike the present situation, however, those past periods of uncertainty have tended to emerge around events that presented fairly simple sets of alternative outcomes.
/on.ft.com/2RJgcoR
****SD: As if to prove the article's point, right around it's publishing time there was another update: Theresa May postponed a vote on her Brexit deal after it became clear she didn't have the backing she needed. In the wake of that news, here are some market updates from Bloomberg U.K. Bond Yield Curve on 'Fire' After May Delays Brexit Vote and Pound Outlook Trashed in Short Term as Brexit Bewilderment Grows
Wall St. Ignored Signs of Trouble for Months. Now It Sees Risks Everywhere.
Matt Phillips - NY Times
When a trade war broke out between the world's two largest economies in June, investors barely blinked. After the Federal Reserve raised interest rates  often a reason for investors to sell stocks  the markets kept climbing. As some of the world's largest economies began to slow down, American markets largely shrugged it off.
Not anymore.
/nyti.ms/2RIGAzk
Charts of the Year: Sterling transitions into EM territory; Expectations for volatility have surged above many developed and emerging market peers
Federica Cocco - Financial Times (SUBSCRIPTION)
Britain may be one of the world's biggest developed markets  but the pound is looking more and more like an emerging market currency these days.
/goo.gl/CXc9tH
JPMorgan Recommends 'Hefty Arsenal of Hedges' for In-Flux 2019
Joanna Ossinger - BloombergQuint
Asset allocation cuts equities while boosting EM and gold Firm's strategists see VIX at median 15-16 range next year
JPMorgan Chase & Co. expects the Standard & Poor's 500 to rise 18 percent by the end of 2019. That doesn't mean the firm sees a smooth ride: It's recommending additional hedges in anticipation of more volatility along the way.
/goo.gl/A3c77o
Why Part of the Market Is a Big Bet on Low Volatility (Podcast)
Bloomberg
The past couple months have seen the return of volatility in markets, with the S&P 500 jumping 1 percent last Monday and then falling more than 3 percent on Tuesday alone. On this edition of Odd Lots, we speak to Chris Cole, the founder of Artemis Capital Management and a long-time watcher of volatility. Cole has argued that a lot of the investment strategies we take for granted in markets essentially amount to a giant bet that volatility will remain low. So what happens when vol starts to come back? And how much of the market will be vulnerable? We discuss.
/bloom.bg/2RN0MA1
****SD: Check out Chris Cole's market note from July What is Water in Markets? Volatility and the Fragility of the Medium
Trade Bear David Woo Hasn't Been This Nervous Since 2008 Crisis
Ben Bartenstein - Bloomberg (SUBSCRIPTION)
Trade bear David Woo says he wouldn't touch emerging markets "with a 10-foot pole."
The Bank of America strategist is the most worried about volatility in global markets -- particularly in the developing world -- since the 2008 financial crisis. He said the Democratic takeover of the House will weaken Donald Trump's hand on trade, making a deal with the Chinese less likely, and spur a fight over the U.S. debt ceiling.
/bloom.bg/2EoMKSq
Hedge Funds Have Stocks to Dump, in Bad Sign for Sell-off
Cormac Mullen - BloombergQuint
There's probably room for more capitulation when it comes to U.S. stocks.
Hedge funds that had stocked up on American equities are still sitting on substantial inventory, according to Sundial Capital Research Inc. While exposure to the S&P 500 Index among long-short equity funds has come down significantly from the record high of early October, it's still well above levels that marked other market lows over the past decade, Sundial President Jason Goepfert wrote in a note to clients Friday.
/goo.gl/6sKGxZ
****For today's action see U.S. Stocks Head to Eight-Month Low as Pound Sinks
| | | | | | Exchanges and Clearing | | | SR-NASDAQ-2018-102 - A proposal to amend the Order Price Protection or "OPP" within The Nasdaq Options Market LLC ("NOM") Rules at Chapter VI, Section 18, entitled, "Risk Protections."
Nasdaq Rule Filing
The purpose of the proposed rule change is to amend Chapter VI, Section 18, entitled, "Risk Protections."
bit.ly/2RIUiSO
Miami International Holdings Reports November 2018 Trading Activity for MIAX Exchange Group
PRNewswire
Miami International Holdings, Inc. (MIH) today reported the November 2018 trading activity for its two fully electronic options exchanges - MIAX Options and MIAX PEARL (together, the MIAX Exchange Group). The MIAX Exchange Group collectively executed over 35.5 million contracts in November 2018 for a combined average daily volume (ADV) of 1,691,311 contracts, representing a total U.S. equity options market share of 9.25%.
/goo.gl/VJmVe7
FXCM Signs Agreement with the Asia Pacific Exchange
Celeste Skinner - Finance Magnates
FXCM Group, an international provider of online foreign exchange and CFD trading, announced this Monday that it has signed a Memorandum of Understanding (MoU) with the Asia Pacific Exchange (APEX).
bit.ly/2RJuBBr
| | | | | | Strategy | | | Options Aplenty: How to Protect (And Flourish) In Current Market Madness
Nick Griebenow - Financial Advisor Magazine
Slipping markets have investors understandably nervous about when it will turn. Tariffs and trade wars, volatility that's back with a vengeance and the recent election season aren't making it any easier. Other than flat fixed income or moving to the sidelines altogetherÂwhat, if anything, can advisors do to help clients weather the current market madness?
/goo.gl/qRkQDD
Bank Of America: A bubble in the stock market is bursting  and its demise marks a significant regime change for investors
Akin Oyedele - Business Insider Prime (SUBSCRIPTION)
A bubble in low volatility that expanded a great deal in 2017 is now bursting, according to derivatives strategists at Bank of America Merrill Lynch.
According to them, this marks a regime change that will change the very nature of the market as we know it today.
They offered evidence for why market turbulence is poised to become the norm, as well as an investing strategy to profit from it.
/goo.gl/xBf3Ec
****SD: The recommendation: "Accumulate longer-dated S&P 500 (SPX) and Russell 2000 (RTY) forward-starting variance, e.g., long SPX 12m24m (~Dec19/Dec20) or 18m24m (~Jun20/Dec20) forward variance + similar tenors in RTY. Why? Longer-dated US equity vol can provide attractive risk-reward late cycle and has significantly lagged 2018's reset higher in the VIX."
| | | | | | Miscellaneous | | | Fed Starts Getting Pulled in Different Directions The rationale for raising rates amid increasing market turmoil seems a bit murkier.
Mohamed A. El-Erian - Bloomberg Opinion (SUBSCRIPTION)
The run-up to the Federal Reserve's rate-setting meeting on Dec. 18-19 is sure to intensify a debate on the central bank's policy stance. It is a difference of views that, although unlikely to be resolved any time soon, shed important insights on a likely contributor to higher and, at times, unsettling market volatility.
/goo.gl/UWxjJz
****SD: Also from Bloomberg Goldman Says Chance of Fed Rate-Hike in March Now Below 50%
Investor Frenzy for Scooter Startups Cools
Eliot Brown, Greg Bensinger and Katie Roof - WSJ (SUBSCRIPTION)
The investor frenzy for shared electric scooters is cooling, as two leading startups lower their fundraising ambitions while dealing with vandalism, rising competition and other growing pains
/on.wsj.com/2RK1HBn
****SD: Sooo, it went from bitcoin/crypto et al. to pot stocks to scooters with a hearty dose of semiconductors and FANG stocks sprinkled in between?
'Fearless Girl' Statue Gets New Permanent Home
Karen Matthews - Bloomberg (SUBSCRIPTION)
The "Fearless Girl" statue that inspired millions with a message of female empowerment was installed Monday at her new home in front of the New York Stock Exchange.
"Welcome to the neighborhood, 'Fearless Girl,'" said Betty Liu, executive vice chairman of the stock exchange. "You're among friends here at the New York Stock Exchange."
/bloom.bg/2EpAuku
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