Category Archives: Risk Management

Global Market Updates – Monday, 11 Nov 2019

The US-China trade war returned to centre stage last week as investors swayed between optimism and caution as mixed, but broadly positive reports turned the markets bullish. Reports earlier in the week suggested that China was demanding more concessions in rolling back existing tariffs as a condition for the first phase deal. There was more uncertainty as the US suggested midweek that a deal might be delayed until December but on Thursday markets turned positive again as China stated that the US had agreed to roll back existing tariffs as part of the first phase deal. As a result Crude Oil and stocks were boosted, while Gold decreased in value.

The General Election campaign officially began in the UK with investors keeping a close eye on opinion polls. The governing Conservatives have a firm 12% lead over the Labour party, although some opinion polls show that this lead is narrowing The election will take place on December 12th and investors will be hoping for a clear result which doesn’t prolong the uncertainty on Brexit.

The Middle East was another source of focus last week with both Iran and Iraq in the headlines and affecting Crude and Gold prices. While Iran continues its nuclear program in Iraq large numbers of protests continued with some blocking the key Nassiriya oil refinery and disrupting oil supplies.

Crude Prices were again pressured by poor inventories data this week, but finished higher over trade optimism.

Stock prices recorded all time highs again this week as trade sentiment supported the markets and better than expected US economic data, continued to calm fears of a US economic slowdown.

The prices of Natural Gas, Crude Oi, Palladium, Silver Platinum, and Gold saw the greatest volatility last week.

Natural Gas was the most volatile last week at 14.25%, and edged lower over the week by 0.64%, as the weather forecasts showed slightly milder weather was expected dampening prices somewhat.

Crude oil also experienced very high oscillations, showing volatility of 13.34%. The commodity’s price slipped slightly by 0.21% and prices were most volatile on Wednesday as fears over global demand continued amid nervousness over US – China first phase trade talks progress.

Palladium saw great volatility, recording 10.06% volatility but falling by 3.04% over the week with a strengthening dollar putting pressure on precious metals last week.

Silver was also highly volatile last week recording volatility of 12.68% and fell lower by 6.31%. Silver saw greatest volatility on Tuesday.

Platinum prices oscillated this week recording 11.46% volatility and declined by 3.04% over the week. The precious metal experienced most volatility on Thursday.

Gold prices continued oscillating by 6.68% last week and traded downwards by 3.51% over the week with the precious metal seeing most volatility on Thursday, in a volatile week that saw trade optimism turn slightly sour at the very end of the week.

Jamie Dimon on JPMorgan’s Big Data Strategy

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Large banks like JPMorgan have always had big data, but in a letter to shareholders released Wednesday, JPMorgan CEO Jamie Dimon likened the difference between yesterday’s and today’s big data to the difference between a rotary phone and a cellphone.

“To best utilize our data assets and spur innovation, we have built our own extraordinary in-house big data capabilities – we think as good as any in Silicon Valley – populated with more than 200 analysts and data scientists, which we call Intelligent Solutions,” Dimon wrote.

Dimon outlined at least five ways the firm has incorporated big data into improving business processes. In the corporate and investment bank, big data is being deployed to improve operational efficiency by analyzing errors. In custody for example, the firm uses big data to identify and find the root cause of breaks in processes or variances in the net asset values of funds. The result has reduced the operational burden and improved client service, Dimon wrote. Continue reading

VIX Products in High Demand by Investors

Volatility arbitrage though not new, has taken on a new dimension, as several new hedge funds have begun to deploy strategies involving VIX futures and options. We’ve seen the VIX universe continue to expand in surprising ways. For instance, a major investment group that principally trades energy and interest rate products, recently became a Trading Privileged Holder, or TPH at CFE. Other new users include European investors trading VIX products against fee stocks, a measure of volatility of the Euro Stocks 50. And banks in Brazil, now actively using VIX products for macro hedging. We also see increasing numbers of customers that sell implied volatility short, which has been an active topic in many trading forums. Its important to note we are still in the early stages of developing previously-identified customer segments globally, such as hedge funds, CTAs, proprietary trading firms and institutional investors. Many customers in these categories are early adopters meaning there is considerable room to further expand every category of VIX user. Quite simply, we believe investors of every type can potentially benefit from the added dimension of pure volatility provided by VIX futures and options, and that education is the key to unlocking that potential. – Ed Tilly CEO, CBOE (Q1’2014 Earnings Call, source: www.SeekingAlpha.com)

Paul Singer on Financial Markets 2014

Paul Singer has survived in the financial markets for 40 years, and that means a lot. He has seen almost every kind of event and volatility, and that kind of experience brings valuable insights for all of us. His cautious view for 2014 given the steep run up in stock markets with easy money from the US Fed Quantitative Easing (QE) over last 5 years since 2008. Here’s a brief interview with him at Davos in Jan 2014.

Wall Street Crash, October 1929

This post is probably the most valuable post on this website, for the amount of history, learning, wealth and losses it captures, and lessons that are as relevant today, as they were in the Wall Street Crash, October 1929. Please read and share. Thanks.

Claud Cockburn, writing for the “Times of London” from New York, described the irrational exuberance that gripped the nation just prior to the Wall Street Crash, October 1929 and the following Great Depression of the 1930s, the bread lines, the apple sellers, etc. As Europe wallowed in post-war malaise, America seemed to have discovered a new economy, the secret of uninterrupted growth and prosperity, the fount of transforming technology:

“The atmosphere of the great boom was savagely exciting, but there were times when a person with my European background felt alarmingly lonely. He would have liked to believe, as these people believed, in the eternal upswing of the big bull market or else to meet just one person with whom he might discuss some general doubts without being regarded as an imbecile or a person of deliberately evil intent – some kind of anarchist, perhaps.” Continue reading