CBOE Global Markets falls due to VIX

CBOE Global Markets falls on concerns over VIX Futures

CBOE Global Markets falls amid VIX swings - Stockwinners.com
CBOE Global Markets falls amid VIX swings – Stockwinners.com

Shares of CBOE Global Markets (CBOE) are falling after a Tuesday sell-off amid swings in market volatility which saw the CBOE volatility index rise over 50.

CBOE RESPONDS

CBOE defended its VIX volatility index after investors and analysts blamed exchange-traded products that aim to track the measure for worsening the wild trading in the stock market, the Financial Times reported Tuesday.

“The markets were resilient…We were generally pleased with how [the VIX] acted in a very volatile and stressful time,” said William Speth, CBOE VP of research and product development. “I think there are a lot of things going on here,” he said.

“Certainly the VIX ETPs are part of the mix, but the 800-pound gorilla has been these volatility control funds.”

MARKET “CLEARLY WORRIED”

On Tuesday, Wells Fargo analyst Christopher Harris said that spikes in volatility would normally be seen as good for CBOE.

However, given that the losses in the overcrowded trade of “short volatility” have been so severe, the market is “clearly worried” about the negative implications for future VIX volumes, which he believes is weighing on CBOE shares.

While he cannot say how much of CBOE’s volumes are tied to short volatility strategies, Harris said that if VIX related volumes were to go back to 2015 levels that would be 15% dilutive to his 2018 EPS estimate, adding that the recent selloff appears to be factoring in “quite a lot of downside.”

Harris has an Outperform rating on CBOE shares.

On Wednesday, JPMorgan analyst Kenneth Worthington downgraded CBOE to Neutral from Overweight and cut his price target for the shares to $110 from $131.

The liquidation and fall of various exchange traded notes represents a risk to VIX Futures volumes, likely bringing a reduction in VIX Futures trading activity looking over the next few months, Worthington wrote.

He also sees some risk to volumes in VIX options and potential for a deterioration in CBOE’s valuation as VIX has been a key growth driver for the company.

Meanwhile, Goldman downgraded CBOE to Neutral from Buy and cut its price target to $115 from $140. Analyst Alexander Blostein said the unwind in the CBOE’s VIX ETF products will likely weigh on the company’s VIX futures franchise, creating headwinds to the firm’s top-line growth and potentially the stock’s valuation.

The analyst added he continues to see longer-term growth prospects in the CBOE/BATS combination, but believes the shares may lag.

CME UPGRADE

Goldman’s Blostein also upgraded CME Group (CME) to Buy from Neutral and raised his price target to $180 from $160.

Blostein expects CME’s revenue growth to accelerate in 2018/19 amid significant growth in open interest and the increasing likelihood of normalization of volatility.

The analyst expects the prospects of rising inflation expectations and normalization of volatility to drive product velocity higher over the next two years, adding to already to the healthy build-up in open interest.

PRICE ACTION

CBOE Global Markets  is down 3.2%, or $3.73, to $113.21, in Wednesday’s trading. Meanwhile, CME Group is up 2.1% to $160.95.


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Wynn Resorts CEO Steve Wynn steps down

Wynn Resorts CEO Steve Wynn steps down, Matt Maddox named CEO

Wynn Resorts CEO Steve Wynn steps down. Stockwinners.com
Wynn Resorts CEO Steve Wynn steps down

Wynn Resorts (WYNN) released the following statements today regarding Chairman and CEO Steve Wynn:

The board of Wynn Resorts reluctantly announced that it accepted the resignation of Steve Wynn as CEO and Chairman of the board. The board has appointed Matt Maddox, currently President of the company, as its CEO, and Boone Wayson as Non-Executive Chairman of the board, effective immediately.

“It is with a collective heavy heart, that the board of Wynn Resorts accepted the resignation of our founder, CEO and friend Steve Wynn,” said non-executive director of the board Boone Wayson.

“Steve Wynn is an industry giant. He is a philanthropist and a beloved leader and visionary. He played the pivotal role in transforming Las Vegas into the entertainment destination it is today. He also assembled a world-class team of executives that will continue to meet the high standards of excellence that Steve Wynn created and the Wynn brand has come to represent.”

Steve Wynn created modern Las Vegas. He transformed the city into an economic powerhouse by making it a world-wide tourist destination.

He designed, built and operated the most iconic resorts on the Las Vegas strip, beginning with the Mirage, then Treasure Island, the Bellagio, Wynn Las Vegas and Encore at Wynn Las Vegas.

Wynn Macau, Wynn’s first resort in the SAR of Macau in China, was designated by Forbes Travel Guide as the best resort in the world.

Along with Wynn Palace in Cotai, the company built by Steve Wynn has been recognized as having more Five Star awards than any independent hotel company in the world.

Wynn Resorts remains as committed as ever to upholding the highest standards and being an inclusive and supportive employer. In fact, more than 40% of all Wynn Las Vegas management are women; the highest in the gaming industry.

The company will continue to fully focus on its operations at Wynn Macau, Wynn Palace and Wynn Las Vegas; the development and opening of the first phase of Wynn Paradise Park, currently under construction on the former Wynn golf course; as well as the construction of Wynn Boston Harbor, which will open in June 2019.

Details of Mr. Wynn’s separation agreement will be disclosed when they are finalized.

Steve Wynn released the following statement: “In the last couple of weeks, I have found myself the focus of an avalanche of negative publicity. As I have reflected upon the environment this has created – one in which a rush to judgment takes precedence over everything else, including the facts – I have reached the conclusion I cannot continue to be effective in my current roles.

Therefore, effective immediately, I have decided to step down as CEO and Chairman of the Board of Wynn Resorts, a company I founded and that I love.

The Wynn Resorts team and I have built houses of brick. Which is to say, the institution we created – a collection of the finest designers and architects ever assembled, as well as an operating philosophy now ingrained in the minds and hearts of our entire team – will remain standing for the long term. I am extremely proud of everything we have built at this company.

Most of all, I am proud of our employees. The succession plan laid out by the board and which I wholeheartedly endorse now places Matt Maddox in the CEO seat.

With Matt, Wynn Resorts is in good hands. He and his team are well positioned to carry on the plans and vision for the company I created. I want to thank all of the employees who have made Wynn Resorts the most admired resort company in the world, and for the support I have received from them in recent weeks.

Most importantly, I want everyone to continue to be proud of this company and the many unique ways it will forever continue to delight guests.”

WYNN closed at $163.22, it last traded at $176.34.


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International rig counts rise

Baker Hughes reports January international rig count up by 6 to 960 rigs

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Rig Counts Rise

Baker Hughes (BHGE) reported international rig count for January 2018 was 960, up 6 from the 954 counted in December 2017, and up 27 from the 933 counted in January 2017.

The international offshore rig count for January 2018 was 196, up 5 from the 191 counted in December 2017, and down 10 from the 206 counted in January 2017.

The average US rig count for January 2018 was 937, up 7 from the 930 counted in December 2017, and up 254 from the 683 counted in January 2017.

The average Canadian rig count for January 2018 was 278, up 73 from the 205 counted in December 2017, and down 24 from the 302 counted in January 2017.

The worldwide rig count for January 2018 was 2,175, up 86 from the 2,089 counted in December 2017, and up 257 from the 1,918 counted in January 2017.

WTI crude is down 33 cents to $63.06 pr barrel.


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