Systematically Trading Volatility Spreads

Download PDF Introduction The following article is heavily inspired by the paper “Investment Strategies with VIX and VSTOXX” (Stanescu, Tunaru, 2012) which analyzed different volatility trading strategies. The strategies are either based on a simple signal or the forecasting of spreads through GARCH models. After analyzing a more recent dataset (our time series will start from January 2nd, 2018, and ends on July 6th, 2022), we propose a variation of the “vanilla” strategy which proves Read more…

Banker’s Toolkit: Financial Institutions Group

Download PDF Introduction As the backbone of the financial industry, the banking sector has always had a predominant role in worldwide economies. Over the last decades, banks have expanded their operations at a global scale, and imposed their presence in almost all economic activities. Understanding this vast sector requires dividing it into sub-sectors. More precisely, we can distinguish two main categories, that of commercial banks, and that of investment banks – both supervised by central Read more…

Market Recap 25/09/2022

Download PDF USA The start of the week can be described as the calm before the storm in major US stock indices, as investors digested last week’s higher-than-expected inflation print and were waiting on the Federal Reserve to announce their policy decision on Wednesday. Accordingly, no index posted significant gains or losses before the announcement of the decision, with the most notable movement being a sharp drop on Tuesday as investors braced for another large Read more…

ADOBE FIGMA DEAL

Download PDF Introduction Adobe Inc, one of the largest software companies worldwide, has announced the acquisition of software design start-up Figma Inc in an attempt to expand its online collaboration tools and reach new customers. The deal, which is valued at around $20bn, is a mix of half cash and half stock and will mark the biggest takeover of a private software company. About ADOBE Adobe Inc [NASDAQ : ADBE] is one of the world’s Read more…

Capitalising on the high market? Repsol to sell 25% of its oil business in search of a greener identity

Download PDF Introduction On September 7, 2022, Repsol announced it would sell a 25% stake of its worldwide upstream business to EIG for $4.8bn, consisting of both equity and net debt. The transaction is expected to close within the coming six months, subject to customary closing conditions. The deal comes as Spain’s largest oil company pushes to raise funds to invest in renewable alternatives seeking a lower-carbon future, while supplying the still needed and highly Read more…

Investing in the Future of Uranium Mining

Download PDF Industry Overview Uranium is a heavy metal that has been used as a concentrated energy source for more than 60 years. It is extracted from uranium-rich minerals, such as uraninite. Uranium ore can be mined either open-pit or underground and is then crushed and treated in a mill to extract the valuable uranium from it. The mined uranium is then processed, stored, and sold as uranium oxide concentrate (U3O8). Its radioactive properties allow Read more…

Summer Deal Recap

Download PDF Welcome back from the summer break! Despite overall year-on-year declines in m&a activity following a record year in 2021, deal flow this year has been rather resilient in spite of the current macroeconomic conditions, including record inflation, conflict in Ukraine, supply crunches, and liquidity tightening from central banks. For more specific insight into recent deals across numerous sectors, check out BSIC’s 2022 Summer Deal Recap below. TMT Orange Merger with Grupo MásMóvil Deal Read more…

Becoming an adult? What Porsche’s planned IPO tells us about its future

Download PDF Introduction After months of rumours, intentions and promises, Porsche, the famous luxury German automaker, and property of the Volkswagen Group (VW), finally seems ready for its IPO, initially announced in February 2022. Porsche should start trading by the end of September and the beginning of October on the Frankfurt Stock Exchange, finalizing the IPO by the end of the year. The offering could value Porsche at between €60 billion to €85 billion, according Read more…

Leveraged Finance: The Eternal Ticking Time-Bomb?

Download PDF Introduction 2022 has been a difficult year for investment banks. Despite the relative strength of their trading divisions, a collapse in M&A value has been weighing down on revenues. Something that has been leading to outright losses, however, is Leveraged Finance. This lesser-known part of the financing groups at investment banks has been the driver behind hundreds of millions of dollars’ worth of losses, with the potential of billions more to come. Such Read more…

Trading the Italian Political Instability

Download PDF Introduction On the 25th of September Italian citizens are going to vote for their representatives in the parliament. Based on the current macroeconomic and political scenario, we analyze the effects that the elections’ results might have on the markets and propose a trade idea based on the BTP-Bund Spread Futures. Political Situation Political elections have been anticipated, from spring 2023 to the 25th of September, due to the fall of Mario Draghi’s government Read more…

Our view on EURUSD

Download PDF A persisting trend DISCLAIMER: The EURUSD pair is an exception to general FX notation. We comply with the quoting convention adopted in the industry: when the Dollar strengthens against the Euro, EURUSD moves lower, and vice versa. For charting purposes, however, we use the USDEUR time series. The surge in the US Dollar since mid-2021 is one of the most persistent trends observed in financial markets in recent years. As we will discuss Read more…

Market Recap 18/09/2022

Download PDF Sentiment in global financial markets was once again largely affected by rising inflation fears. USA The week started with a continuation of the relief rally in risky assets, as sellers momentarily reduced their pressure. The scenario was quickly reversed as soon as traders’ expectations for Tuesday’s inflation reading were proven wrong. With the CPI rising to 8.3% YoY in August versus the 8.1% expectations, hopes of having reached “peak inflation” collapsed, leading to Read more…

Market Recap 1/05/2022

Download PDF USA Major market indexes registered significant losses for the fourth consecutive week, highlighting April 2022 as the worst month for the markets since March 2020. The S&P 500 is still in correction territory, losing 8.8% in the last month, and being down approximately 14% from its January all-time highs. Once again technology stocks led the sell-off, as demonstrated by the technology-heavy Nasdaq Composite that remains in bear market territory after notching its worst Read more…

Investment ideas for the earnings season: Aston Martin Lagonda

Download PDF Introduction In view of the coming season of earnings releases we analyze the famed British carmaker Aston Martin, and we propose: 1) a long investment on its equity based on a successful execution of its multi-year turnaround plan, and 2) a trade idea on the implied vol of the stock in relation to its earnings which will be announced on the 4th of May. Investment thesis Aston Martin Lagonda (AML) is a well-known Read more…

Yield Curve Control – a viable tool for Central Bankers?

Download PDF Conventional economic theory suggests that Central Banks (CBs) should only intervene to influence short-term interest rates and allow the market to set long-term rates. However, in modern economic history, this belief has been put into question: most notably, the US and the Euro Area have reacted to the Great Financial Crisis by employing aggressive, unconventional expansionary monetary policy, namely Quantitative Easing (QE), to reignite the economy. For some countries, though, QE has not Read more…