| August 16, 2017 | | | | | Spencer Doar
Associate Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Why You Should Bet Your Career on Chicago FinTech - Michael Kraines
Education.MarketsWiki.com
"Twenty years ago it was about consolidation. It was about exchanges being smashed together and brokerages being smashed together. Now it's going to be about technology being added to these traditional, old school businesses."
In this video from MarketsWiki Education's World of Opportunity event in Chicago, Michael Kraines, chief financial officer and chief commercial officer of Trading Technologies, discusses the growing Chicago fintech landscape and why the field can be a solid career choice.
Kraines points out investment in Chicago fintech in the first half of 2017 has nearly matched the total from all of 2016. In 2016, venture capitalists shelled out almost $1 billion in 90 deals. In the first half of 2017, that number is $952 million in 55 deals. Helping matters is Chicago's existing trading infrastructure of exchanges and traders. To Kraines, the future of Chicago markets looks bright.
Read the rest and watch the video »
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The Fed Minutes
federalreserve.gov
The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on July 25-26, 2017.
bit.ly/2waXijY
| | | | | | Lead Stories | | | Trading Firm DRW to Buy High-Frequency Trader RGM
Alexander Osipovich - WSJ
Electronic-trading firm DRW Holdings LLC has agreed to buy high-frequency trader RGM Advisors LLC, the latest sign of how the long period of low volatility is shaking up the high-speed trading world and forcing out the weaker players.
on.wsj.com/2wankDG
****SD: More consolidation! Press release here. Best bit from the story: "The firm [RGM] made $17 on its first day of trading in December 2001, which its founders used to buy three margaritas, according to an interview with Mr. Robinette posted on RGM's website." Boy, 2001 was a different time  I doubt the availability of very many $5.50 margaritas these days, at least in Chicago.
Options Volumes Struggle to Break Out in July
TABB Forum
Listed options volume totaled 313.4 million in July 2017, an increase of 1.5% from the July 2016 total but a decrease of 61 million contracts from June 2017, which closed the second quarter and half-year. The summer slowdown was exacerbated by the continued anemic volatility, which stifled any opportunity for a volume growth spurt.
/goo.gl/btHM28
Investors remain bearish on volatility moving higher
Joe Rennison - Financial Times
Investors have redeemed more than half of the outstanding shares in a popular exchange traded product that gives exposure to the volatility of US equity markets, following a brief jump in a widely tracked measure of volatility last week.
on.ft.com/2x4Dv1Z
****JB: Or it could quintuple (see next story). This is what makes markets.
***SD: So far so good for intrepid vol adventurers - VIX is back under 12 today though some movement on news out of D.C. Also from Business Insider - Traders are doubling down on one of the market's hottest trades
The VIX could quintuple by Halloween, strategist warns
Rebecca Ungarino - CNBC
The CBOE volatility index, widely regarded as Wall Street's "fear gauge" that measures implied market volatility, has traded in a narrow range this year, at one point hitting its lowest level on record. But all that's about to change, one market strategist forecast in a note to clients on Tuesday.
cnb.cx/2x4D9YW
****JB: If that happens we will have to start calling 50 Cent 50 Dollar.
Computer error? Top trend following hedge funds lose out in 2017
Maiya Keidan - Reuters
Big computer-driven hedge funds such as AQR Capital Management, Aspect Capital and Two Sigma lost money in the first seven months of 2017, with human stock-pickers making better returns.
reut.rs/2waY5kM
****SD: Also see The Next Quant Meltdown from Institutional Investor
There's a Reason People Are Worried About Low Volatility
Colin Simpson - Bloomberg
Investors and policy makers who have worried about the historic slide in stock volatility the past year might have had good reason to do so: most market crashes are preceded by exactly that pattern.
A study of 40 financial-asset bubbles conducted by researchers including Didier Sornette at the Swiss Finance Institute concluded that in about two-thirds of the cases the crashes followed a spell of lower volatility -- the "lull before the storm." The study didn't comment on current market levels.
/bloom.bg/2x4KPL2
****SD: From the article: "Our main finding is that volatility is neither a reliable indicator of the maturation of a bubble nor of its impeding ending in a crash."
| | | | | | Regulation & Enforcement | | | Fed Fischer: Plans to unwind banking regulation 'very, very dangerous'
Karen Gilchrist - CNBC
Leading Federal Reserve policymaker Stanley Fischer has hit out at plans to unwind banking regulation, brandishing it a "terrible mistake."
cnb.cx/2waRtTi
SEC Concludes Volcker Rule's Effects Are Unknown
Peter Ireland - Economics21
The Securities and Exchange Commission has just released a detailed Report to Congress examining trends in financial market activity since the implementation of the Volcker Rule. Since this report was requested by Congress in September 2015, before the November elections, it cannot be interpreted as a direct commentary on any specific proposal advanced by the Trump Administration. Nevertheless, the SEC's report does cite and discuss another recent document, released in June by the U.S. Treasury, that argues for a number of changes to the financial regulatory system, including modifications to the Volcker Rule.
/goo.gl/pUDwEw
The Wild World Of Biotech Insider Trading
Samy Hamdouche - Seeking Alpha
Legal restrictions on insider trading have been evolving continuously for the last 100 years and are fraught with grey areas.
Traders today are able to exploit several major loopholes in order to legally trade on the basis of insider information.
/goo.gl/CNNwRB
****SD: Comprehensive rundown.
| | | | | | Strategy | | | Investors Have Been Selling Volatility Since Thursday's Spike In VIX
Peter Tchir - Forbes
VIX finally spiked last Thursday (here). It has declined since then and is hovering around 12 as I write this report.
It isn't surprising that it has receded, but I do find it surprising, maybe even shocking, how willing investors have been to book profits in long VIX positions and to open new positions shorting VIX.
bit.ly/2x4OtUS
Crude Oil Forces "God" to Sidelines
Sage Anderson - tastytrade blog
When even "God" can't make it trading crude oil, you know times are tough.
Such was the news in early August when legendary crude oil trader Andy Hall announced the shuttering of his hedge fund Astenbeck Capital Management LLC, due to poor performance.
Hall (aka "God"), a longtime trader of oil, became well-known not only for the size of his bets, but also the supersized bonuses he occasionally received.
bit.ly/2wb5KiV
Brexit-Plagued Pound
Mark Gilbert - Bloomberg
The pound took another pasting on the currency markets Wednesday, dipping below last year's low and extending a trend that's seen it lose more than 6 percent of its value against the euro so far this year. As the wrangling over Brexit worsens, it looks like the trend is your friend.
jlne.ws/2x4obCm
Fed Minutes May Show Battle Lines Hardening Over Soft Inflation
Christopher Condon - Bloomberg
Federal Reserve watchers may get a better feel Wednesday for how many policy makers remain resolved to raise interest rates again this year, and how many are wavering amid a five-month stretch of soft inflation reports.
jlne.ws/2x4C57E
6 catalysts for volatility, and how to play it
Fred Woollard - Livewire
Implied volatility is now trading at record lows across a variety of asset classes, especially in US equities. This means that option markets are priced in the belief that the economic and political outlook in America and the world is as stable as it has been for more than 25 years.
bit.ly/2waMFNK
Here's An Options Play For Gold Right Now
Neils Christensen - Kitco News
There is still an opportunity to make money in gold, despite the growing bearish sentiment in the marketplace as prices remain in negative territory for a third session, unable to break through key resistance at $1,300 an ounce.
bit.ly/2x4GKXc
| | | | | | Miscellaneous | | | Why Bitcoin ETFs Are Closer To Reality
ETF.com
Bitcoin may be the hottest financial asset of 2017, but many investors have had a surprisingly hard time getting a hold of it. For those unable or unwilling to jump into the unfamiliar world of bitcoin wallets and unregulated bitcoin exchanges, there's been few good ways to get exposure to the surging digital currency.
bit.ly/2waPC0U
****SD: Also see Here's why you can't call bitcoin a 'bubble' from John McAfee.
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