Mid-Day Market Report
Abacab Fund Sees Mispricing In Options As Black-Scholes Has Become “Inadequate”
Abacab Asset Management's flagship investment fund, the Abacab Fund, had a "very strong" 2020, returning 25.9% net, that's according to a copy of the firm's year-end letter to investors, which ValueWalk has been able to review. Commenting on the investment environment last year, the fund manager noted that, due to the accelerated adoption of many Read More
- US: Dow: 12722.94 (0.37%), S&P 500: 1322.57 (0.60%), NASDAQ: 2816.75 (1.08%)
- Europe: CAC: 3312.48 (-0.31%), DAX: 6421.85 (0.04%), FTSE: 5723.00 (-0.50%).
- Asia:China: 2319.12 (0.00%),Hong Kong: 20110.37 (0.83%),India: 5158.30 (0.60%),Japan: 8883.69 (1.11%)
- Metals: Gold: 1699.60 (2.11%), Silver: 33.14 (3.66%), Copper: 3.84 (0.95%)
- Energy: Crude Oil: 100.09 (1.15%), Natural Gas: 2.68 (4.78%)
- Commodities: Corn: 6.34 (0.60%), Soya Bean: 12.17 (-0.27%), Wheat: 6.42 (1.34%)
- Currency: EUR/USD: 1.3090 (0.4192%), GBP/USD: 1.5634 (0.0477%), USD/JPY: 77.6715 (0.0052%)
- 10 year US Treasury: 1.942% (-0.118)
Market News Update
US stocks shed losses after Fed statement: The markets shed early losses and flipped slightly into the green after the Federal Reserve unveiled plans to hold interest rates at low levels until late 2014. As of 1:00 p.m. ET, the Dow Jones Industrial Average rose 5.5 points, or 0.04%, to 12682, the S&P 500 gained 1.7 points, or 0.13%, to 1316 and the NASDAQ Composite rose 14.1 points, or 0.53%, to 2801. http://money.cnn.com/2012/01/25/markets/markets_newyork/index.htm?iid=HP_LN
Fed says no rate hike until late 2014: The Federal Reserve on Wednesday said it will likely not raise interest rates until at least late 2014, much later than it had said previously, as it nurses a still-sluggish economic recovery. https://www.cnbc.com/
Treasuries rally: Treasuries extended gains, sending five-year note yields to a record low after the Federal Reserve said it sees “exceptionally low” interest rates through at least late 2014. The yield on the five-year note sank as much as 14 basis points to 0.76 percent as of 1:14 p.m. in New York. http://online.wsj.com/article/SB10001424052970203806504577182751127132254.html?mod=WSJ_Markets_MIDDLTopStories
Crude oil rises: Crude futures turned positive Wednesday after weeklyU.S. oil inventories didn’t rise as high as an oil-industry group had indicated and demand for fuel products improved slightly.
Company News Update
- Apple (AAPL) jumped 5.9 percent as surging demand for the iPhone and iPad cemented its role as the most valuable technology company.
- Boeing (BA) dipped after the airplane maker reported a jump in fourth quarter profit and revenue, but issued disappointing full-year earnings guidance.
- Delta (DAL) reported fourth-quarter earnings that widely beat expectations, sending shares of the airline higher.
- Yahoo (YHOO) reported a much quieter quarter than Apple, posting earnings in line with analysts’ expectations after the close Tuesday. Shares of the company slipped.
- Nvidia (NVDA) declined 1.3 percent to $14.75. The company followed other PC chipmakers in reporting lower-than-anticipated sales, hurt by last year’s flooding inThailand. The disaster shut down production of disk drives, leading to a decline in computer shipments.
- Advanced Micro Devices (AMD) also reported earnings late Tuesday, posting revenue that missed expectations. But shares of the semiconductor company rose slightly.
- United Technologies (UTX), another blue-chip, posted mixed results, beating Wall Street’s view on the bottom line, but missing on the top line.
- Shares of Ericsson (ERIC) tumbled after the Swedish telecom-equipment maker reported a 66% drop in fourth-quarter profit, driven by weak network sales.
- Xerox Corp. (XRX), the provider of printers and business services, tumbled 8.3 percent after giving earnings forecasts that trailed some analysts’ projections.
- Textron Inc. (TXT) surged 15 percent after forecasting higher 2012 profit than analysts estimated.
- Illumina Inc. (ILMN) surged 43 percent to $53.94. Roche Holding AG offered $5.7 billion in a hostile bid for Illumina to bolster sales of gene-mapping equipment and services. Roche proposed paying $44.50 a share, 18 percent more than yesterday’s close.
Hedge Fund News Update
- Diamondback Capital Management, a largeUS hedge fund managing billions of dollars of assets, has settled a groundbreaking FBI case around the alleged $62 million (£40 million) insider trading of Dell and Nvidia stock.
- Hedge funds are combing through the small print ofGreece’s planned rescue deal with private creditors, readying a wave of potential litigation to squeeze a better payout from the country.
- A UShedge fund has been handed a £7.2m fine by the UKfinancial markets watchdog for trading on inside information about Punch Taverns. David Einhorn and his fund, Greenlight Capital, were penalized by the Financial Services Authority (FSA) for trades made in 2009.
- Several high-profile hedge fund managers are attempting to set up their own firms, despite a year of underperformance for the industry. Managers including ex-Gartmore employee Guillaume Rambourg, former Barclays Capital commodities trader Todd Edgar and Sutesh Sharma, a senior proprietary trader at Citi are amongst those trying to raise capital for new businesses.
- Rotoblock Corporation, a California-based company that invests in emerging technology in China has appointed a hedge fund veteran Andrew Schneider as CEO.
- Daniel Mudd has resigned as CEO and director of the New York-based hedge fund Fortress Investment Group LLC in order to focus on a federal government lawsuit relating to his former work as CEO of Fannie Mae.
- Investor pressure on hedge fund fees is leading an increasing number of managers to make concessions on the way they structure their remuneration policies.
- Although it’s been well-documented that hedge funds endured a difficult 2011, research shows the industry enjoyed a bit of a comeback as the year drew to a close. Data from Hedge Fund Research Inc. shows that total capital invested in hedge funds climbed back to $2 trillion to conclude 2011 as net inflows exceeded $70 billion for the year; the most investors have poured into the industry since 2007.