Trade Finance

"An epic bubble colossal", so Peter Boockvar, managing director and chief analyst at the Lindsey Group, referring to CNBC what is happening on the global bond markets.

In fact, the market for government bonds perceived as "safe", are touching ever lower yields: that of the ten-year US Treasury bond this week fell to historic lows. According Boockvar, investors are not rushing to buy stocks from very few returns for the interest they offer, but to achieve capital gains (or capital gains).

The investors race to be considered safe havens in times of uncertainty has increased the amount of sovereign bonds in circulation worldwide at negative yields. According to Fitch Ratings, until last Monday the total stood at 11.7 trillion dollars, an increase of 12.5% compared to the end of May. According to the rating agency, the thing to note is that investors are willing to hold them in the portfolio for a longer period.

Algorithmic trading, a systematic method that utilizes mathematical models for making transaction decisions in the financial markets, is a global phenomenon, but the subject is a complex one1.

Stock exchanges began transitioning from a traditional auction to computerized transactions in the early 1980s. In the late 1980s and early 1990s, Electronic Communication Networks (“ECNs”) became increasingly popular for traders looking for more efficient access to the markets.

In 2001, IBM reserchers published Agent-Human Interactions in the Continuous Double Auction2. The research paper found that in a Continuos Double Auction market process, simple software bidding agent- strategies were able to outperform human subjects by a clear margin, setting the stage for the high-frequency trading, an algortithmic trading approach characterized by high speeeds and widely used today in the financial markets.

Last month I interviewed, in occasion of the publication of his last book “A guide to creating a succesful algorithmic Trading Strategy”, Perry Kaufman. He began his career as a “rocket scientist,” first working on the Orbiting Astronomical Observatory (OAO-1), the predecessor of the Hubble Observatory, and then on the navigation for Gemini, later used for Apollo missions, and subsequently in military reconnaissance. There is a certain connection between the construction of a trading program and the world of rockets; in fact, the earliest systematic programs used exponential smoothing, a technique developed in Aerospace for estimating the path of missiles. In the early 1970s, he started trading using automated systems while the idea was demeaned by professional traders as “ridiculous”, “the market just doesn’t work that way”, “you can’t make money if you don’t know the value of the stock”8. Now that opinion seems to have been turned upside down

While analysts and traders from New York to London predict a further rise in gold, one of the veterans of the investment, Jim Rogers, states that, after the Brexit, prefers to focus on the dollar as a safe haven and not on the yellow metal.

Rogers, like George Soros, was among the founders of the Quantum Fund, the legendary US fund that in the 1970-1980 decade earned 4,200% while the S & P was only 47% advanced. It’s also the father of the Rogers International Commodities Index (Rici) at the end of the nineties and works as guest professor teaches finance at Columbia Business School.

We were cautious in our diversified portfolios with a reduced exposure to equities and high yield bonds. We held significant amounts of cash (over 10% on average) to stay flexible and be able to act quickly. We sold our UK exposure and hedged the GBP currency in order to preserve investors’ capital. We also hedged part of our peripheral exposure by selling futures contracts on Italian debt.

The markets had been anticipating a “remain” victory and the surprise effect should even amplify the impact on financial markets. The immediate effect should be extreme volatility with market dislocations due to margin call, panic selling and the search for safe haven.
The UK are to enter into a two year procedure with the EU, to negotiate the exit terms. The EU will probably not make it easy in order to discourage other leavers, which promise to keep uncertainty and volatility fairly elevated at least for the next months.

Once again the Chinese A-Shares, the shares listed on the Shanghai and Shenzhen Stock exchanges in renminbi, the MSCI Emerging Markets. The index provider MSCI has again postponed the inclusion of local Chinese shares in its benchmark on global emerging stressing that the Asian giant has to do more to make its markets accessible to foreign investors.

MSCI returns so for the third consecutive year the inclusion of A Shares and this year analysts gave a probability of greater inclusion to 50 percent, with Goldman Sachs who recently said that the odds were well 70 per cent believing that latest moves of the China Securities Regulatory Commission had dissolved concerns about the "beneficial ownership" of the shares held.

The title of Credit Suisse is at historic lows: at the Zurich Stock Exchange the title stock of the second Swiss bank has been exchanged in the afternoon at 11.61 francs, the lowest level since 1989, according to Reuters calculations.

Around 15.30 the share has come to lose about 4% over Friday, then it is slightly relieved: after 16:00 left on the ground about 2%. Bank stocks are under pressure throughout Europe. UBS also not exempt from this trend.