​Mid-Weekly: FIA Innovation; Uncertainty Grows; Newsletter Live

The Dow Jones Industrial Average broke 20,000 today as the CBOE VIX slipped another 2%, thanks largely to the post Trump rally, which is seeing an increase in sector rotation. That sector rotation is creating some interesting dispersion and some hedge funds are likely anticipating some great dislocations to trade around. Meanwhile, some participants are concerned a market correction is inbound should some of Trump’s policies seem unpalatable to the economy. In Europe, investors have been seen selling long-dated convexity and skew on the Euro Stoxx 50 via knock in risk reversals, which typically involve buying 2.35x SX5E Dec. 2021 3,300 strike calls and selling 1x SX5E Dec. 2021 3,300 strike puts. In annuities, innovation this year will likely revolve around risk premia backed FIAs, as sellsiders look to put their custom index expertise to work.