Daily Briefing – September 16, 2020

Published on
September 16th, 2020
Duration
35 minutes


Daily Briefing – September 16, 2020

Daily Briefing ·
Featuring Haley Draznin, Ash Bennington, and Roger Hirst

Published on: September 16th, 2020 • Duration: 35 minutes

Senior editor, Ash Bennington, invites managing editor, Roger Hirst, to take a deep dive into options to gain clarity on what this market's greatest, current mover is. Roger argues that, contrary to conventional thought, currently the institutional "whales" are less influential than the retail investors, who are driving the options markets and have made themselves out to be the "megalodon." He breaks down how retail investors are contributing to momentum through options, how "air pockets" in equity markets and contract expiries are linked, and how rising volatility will continue to increase "air pocket" risks. Roger then elaborates on why he believes these aren't structural risks as of yet, but rather that insolvency risks are more near-term by observing how zombification of large-cap companies is on the rise due to misallocated capital and QE infinity. Ash and Roger then finish off their conversation by exploring the renewed risks to a clean Brexit. Real Vision reporter Haley Draznin analyzes at the correlation between retail sales out this morning and the performance in the market. She also looks at the surge in IPOs this week, including Snowflake's debut today.

Comments

Transcript

  • an
    antti n.
    17 September 2020 @ 23:18
    Well done Roger, spot on all counts. Dealers have been buying back gamma as well as delta hedge for 2w expiries, which explains recent trend why implied vol and megacap equity price have been rallying at same time. As a credit guy, couldn't agree more - CBs have broken the market after Fed's 750bn corp buying programme. You just know CBs will intervene if market turns south. Only caveat is that EUR HY is lazily expecting CB support, not so sure ECB will get there.
  • DS
    David S.
    16 September 2020 @ 23:15
    Really good discussion. A clean Brexit will be immediately applauded by me. It has been a struggle. If I do not hear the word again, I shall be happy. It will be great for the UK as they can focus on the UK. From across several ponds, I think Europeans have a strong sense of being European. Europe and the UK are fabulous places with great people. I just do not understand why Europeans want to be in a Euro straight jacket or having Brussels bureaucrats yelling "Thou Shall Not!" The cheaper Euro and interest rate benefited Northern Europe’s exports until now. The Euro benefited major Southern European countries by enabling them to borrow tons of money they would not have been able to borrow otherwise, until now. Where all the borrowed money went no one knows – what else is new. Some European countries should just declare bankruptcy when the time is right. The Euro should fold its tent and steal away in the night - a failed political currency. Thousands who loaned money to Italy, Greece, Spain, etc. because they felt there was no risk, must think themselves crazy. The strongest area to recover from COVID Times will be Asia as they did the best job dealing with the crisis. The UK will be fine unless internal divisions bring it down. The US will survive, but COVID Times will show everyone who is swimming without trunks. We already know who is swimming topless. I would love to be able to tell you where to invest, but alas. The world will go on. Be safe so you can enjoy the beauty of Nature - if your toes do not get too hot. DLS
    • GD
      Graham D.
      17 September 2020 @ 22:29
      My view from the British side of the pond is that Brexit will cause immense harm to the UK for negligible benefit unless reducing immigration from Eastern Europe is considered beneficial. And make no mistake, that is what has driven the Brexit vote. Prior to the free movement of people being introduced, no-one here apart from from a few zealots really gave much thought to the EU. The EU is far from perfect, obviously, (where is?), but the suggestion that we suffer from oppressive Brussels bureaucrats yelling ‘Thou Shall Not’ is laughable. Unless you’re referring to efforts to control food and environmental standards and make the likes of Google et al pay a little bit of tax.
  • CD
    Carl D.
    17 September 2020 @ 20:07
    Ash's video needs a simple color correction filter boosting contrast and saturation, looks pretty gray.
  • CS
    Christos S.
    17 September 2020 @ 14:40
    Rather than option whale or option megalodon, Options krill : bigger than a whale in total mass but ultimately whale food
  • ms
    matthew s.
    17 September 2020 @ 13:46
    when will we get morning shows. some of us are addicted to content
  • CT
    Chris T.
    17 September 2020 @ 09:37
    Credit indexes are useless as a barometer 1 week out from roll dates
  • CA
    Cyrus A.
    17 September 2020 @ 08:45
    With reference to 5:40 from the end, as the UK has monetary independence from the EU, could it not adjust its currency before Brexit?
  • CT
    Chris T.
    17 September 2020 @ 08:43
    Rodger is by far the best regular guest... be good to see him doing more interviews
  • DB
    Donna B.
    17 September 2020 @ 02:08
    Ash was skillful in asking the questions in which Roger imparted much information. Roger should be on at least once a week.
    • RG
      Richard G.
      17 September 2020 @ 06:16
      Roger taking us to school again. Always wonderful to see him on RV.
    • LF
      Louise F.
      17 September 2020 @ 06:42
      Always insightful. I would love to see Roger more often also!
  • JS
    Jon S.
    17 September 2020 @ 05:36
    Great introduction Haley! Getting better day by day!
  • CM
    Cory M.
    17 September 2020 @ 04:25
    Roger’s an Ace.
  • MD
    Matt D.
    17 September 2020 @ 04:10
    Thanks Ash and Roger - it still intrigues me that people give the retail option buyers so much "respect" - I think others have said it in their own way - but why doesn't the serious money just churn them. That's been the story for the past - forever - and I watch this type of thing on a daily basis. The Market Makers aren't just sitting confused and dazed surely while losing out on their premium with an asymmetric risk profile against them? For example - this week for the Australian expiry, the market couldn't break certain levels - pre-defined levels by the way (meaning they showed their hands, they must as it is algo programmed) but we have kept lower all week despite the strong leads, even strong employment data today. My point being they (Market Makers) can do what they like for the Australian index (obviously within reason) so why is this recent phenomena for US retail options beyond their (THE big MMakers) "powers". They either are still profiting via their hedges (risky) or it is more than what it might seem? Saying that, US futures are down a decent amount already (1% midday Sydney time) along with gold ($21) and most currencies, BTC a touch lower. Thanks too for your Brexit insights Roger. Makes sense, works in the UK's favour.
  • DS
    David S.
    17 September 2020 @ 00:11
    I'll take Ash with Raoul, Roger, Ed and TG every week and you can sack everyone else. That Roger's wicked smart and thank God he's a fast talker as there's much he has to say.
    • DP
      Duane P.
      17 September 2020 @ 03:18
      I like Tyler Neville.
  • PP
    Patrick P.
    17 September 2020 @ 02:59
    Thanks to the Fed ... we have a giant ponzi scheme. At some point it will dawn on the "Marks" that the Fed is nothing but smoke and mirrors and a house of cards. "A MARK".....A person who believes everything he or she hears or is so out of place that they are easily targeted by people that mean harm.
  • DR
    Derrick R.
    17 September 2020 @ 01:59
    This was a great discussion. Also on my mind is the Snowflake IPO and just how nice the deal was for pre-IPO investors. I was wondering if that is potentially a good topic to explore for those of us individual / retail investors - I think I've heard on RV that the percentage of float to total shares in IPOs has fallen over the years and could be a large factor in the wild price action once a company goes public. As an investor without access to pre-IPO companies, what's the best way to think about these events? I'm skeptical of the "opportunity" of buying Snowflake at 2x or more than what insiders paid, but, maybe it's just begun, and, as Ed would say, "maybe we're off to the races?"
  • RF
    Ricky F.
    17 September 2020 @ 01:53
    My only comment to Roger on Brexit, is that the majority of working class voted for a clean Brexit. London did not.
  • TM
    The-First-James M.
    17 September 2020 @ 00:18
    Redfish? Haley, did I just hear you say Redfish? I think you meant Redshift. ;) I'm a Data Engineer working in a team currently in the process of trialing Snowflake. How it does its 'thing' is nothing remotely like how Oracle and Redshift do theirs. All three databases are very different. Looking forward to playing around with Snowflake tomorrow, anyway.
    • DR
      Derrick R.
      17 September 2020 @ 01:50
      in my experience there's not really much there for data engineers - its a cloud (elastic horizontal scale) relational SQL data warehouse.. it's nice when all you need is SQL, you want to have the benefits of elastic scale with fine grained control over cloud costs (you can provision cloud compute power separately across your user base regardless of the data being queried), and there's an interesting feature allowing you to sell your data as a service.. but.. you won't be writing data pipelines in python, or processing exotic file formats, etc..
  • PF
    Patrick F.
    17 September 2020 @ 00:12
    Hey Ash and Roger, I've been buying odd lot calls as a retail investor (to hedge) because of what I've learned on RealVision! And it works! :) Cheers
  • PW
    Paul W.
    16 September 2020 @ 23:39
    I don't understand how the Fed buying or potentially buying corporate debt reduces the cost of cds as Roger indicated. I understand how the Fed is compressing interest rates on corporate debt, but JC Penney would have gone bankrupt whether the Fed held their debt or not. Maybe I am looking at this too simplistically.
  • YA
    Yaz A.
    16 September 2020 @ 23:25
    So mike green was right, Since March.
  • NL
    Nikola L.
    16 September 2020 @ 22:53
    Roger, how do you know that large portion of retail are not using leverage to buy these options?