| August 12, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
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| | | | | | Lead Stories | | | Derivatives Suggest a 'Sell-the-News' End to the Ethereum (Ether) Rally
Vildana Hajric and Olga Kharif - Bloomberg
Ether is surging in anticipation of a groundbreaking software upgrade to its blockchain. Sophisticated traders are positioning for the rally to continue until that happens -- and then for the cryptocurrency to plummet afterward.
Speculators in derivatives markets are scooping up call options to bet on an Ether advance into September, when the upgrade is supposed to happen. Yet futures and options are suggesting they're expecting the price to drop after the event in what analysts at Glassnode say could be a "sell-the-news"-type of situation.
/jlne.ws/3w2mvdo
Traders expect the ether rally to fizzle out as upcoming merge to proof-of-stake system will be a 'sell the news' event
Matthew Fox - Business Insider
Ether has surged by more than 100% from its June low as anticipation builds for the upcoming merge.But the Ethereum merge could ultimately be a "sell the news" event for ether prices, according to Glassnode.
The highly anticipated Ethereum Merge that is expected next month could ultimately prove to be a "sell the news" event for ether prices, according to Glassnode.
/jlne.ws/3SPe2nV
Can the stock market bottom without Wall Street's fear gauge hitting 'panic' levels?
Joseph Adinolfi - MarketWatch
Investors have endured a lot this year, and it's not over yet with market technicians debating whether U.S. stocks are embarking on the start of the next bull market, or simply another vicious bear-market rally, as investing titans Stanley Druckenmiller and Michael Burry have warned.
For investors struggling to discern how best to position their portfolios amid a morass of confusing price action and technical signals, one in particular stands out: The Cboe Volatility Index, otherwise known as the VIX, or the stock market's "fear gauge," which this week tumbled back below 20 for the first time since April.
/jlne.ws/3zLFJVG
ETFs shine brighter than mutual funds after brutal first half
Jackie Noblett - Financial Times
ETF providers may find a silver lining after 2022's brutal first half with some US investors who took significant losses in mutual funds during the period looking to transition their assets to ETFs, executives said.
This is particularly true with fixed-income funds, which during the first six months of this year experienced the worst drawdown the products have seen in 30 years, executives said. Investors who have experienced huge gains in active bond mutual funds since the 2008-2009 financial crisis may have an opportunity to take losses in recent fund purchases, combined with embedded gains, and move that money into lower-cost options.
/jlne.ws/3AjIMWX
Don't Trust This Stock Market Rally. Strategists See More Trouble Ahead.
Reshma Kapadia - Barron's
The S&P 500 15% summer bounce off its June lows may be as fleeting as the relief from the heat a weekend at the beach provides.
Bank of America strategists told clients in a note on Thursday that they don't see enough signposts to signal the end of a bear market. Instead, there are signs of trouble aheadâenough to recommend investors to be more strategic rather than jumping in.
/jlne.ws/3pgiT3K
The Stock Market Rally Looks a Bit Squirrely, Plus Heat Waves, US Climate Bill
Mark Gilbert - Bloomberg
Follow the (Smart) Money
David Kelly, the chief global strategist at JPMorgan Asset Management, reckons the equity market could rally to record highs in the next few years as softer inflation and a slowing economy restrain Federal Reserve interest-rate hikes. With the benchmark S&P 500 index reaching a three-month high this week, Robert Burgess has a chart for those investors skeptical that the gains can be maintained. It's the Smart Money Flow Index:
/jlne.ws/3PmuKYO
Stock market bulls eye technical signal for further gains
Saqib Iqbal Ahmed - Reuters
Some stock market bulls are watching a technical indicator for clues on whether a summer rebound in U.S. equities will roll on.
The S&P 500 (.SPX) is up 15% from its mid-June low, a rally that gained even more momentum after Wednesday's U.S. inflation data showed consumer prices unchanged for July. This bolstered the case for the Federal Reserve to end its market-bruising rate hikes sooner than previously expected.
/jlne.ws/3QmHekt
Hedge funds demand more customisation capabilities and deeper dark aggregation
Adler Smith - TheTrade
In 2021, the hedge fund industry posted double digit returns for the second year in a row, but not everything was rosy. According to the Barclays Hedge Fund Index, hedge funds returned 10.22% in 2021, significantly lagging the S&P 500, which posted a 26.89% return over the same period.
Last year's performance was truly non-linear, punctuated by disparate returns across strategies. Managing those funds also became more complicated. Remote work, meme stocks, and volume spikes from individual investors added to the complexities of optimising liquidity. With the Barclays Hedge Fund Index down 9.58% through the end of June, 2022 has been another challenging year.
/jlne.ws/3zYG5su
| | | | | | Exchanges | | | Robinhood must face U.S. market manipulation claims over 'meme stock' rally, judge rules
Jody Godoy and Hannah Lang - Reuters
Stock trading platform Robinhood Markets Inc (HOOD.O) must face market manipulation claims over restrictions it placed on trading during last year's "meme stock" rally, a U.S. judge ruled on Thursday. U.S. District Court Judge Cecilia Altonaga in Miami said in the ruling that investors in GameStop Corp (GME.N), AMC Entertainment Holdings Inc (AMC.N) and seven other stocks can proceed with a proposed class action lawsuit alleging the restrictions artificially depressed share prices.
/jlne.ws/3C2r1wq
Fixed Income market briefing August 2022
Lee Bartholomew - Eurex
With the summer in full swing, and scorching temperatures persistent across Europe, markets have had plenty of event risk to digest. Volatility continued throughout July, and we saw raised volumes across the portfolio, which we expect to continue in August. Futures and options volumes were 31.5% and 23% higher, respectively. Listed FX volumes continued to be well supported, increasing 630% compared to last year. Throughout the increased volatility, we continue to engage regularly with our members to ensure that key initiatives remain on track and to exchange perspectives, insights, and updates for the remainder of the year.
/bit.ly/3SKrJUS
| | | | | | Regulation & Enforcement | | | Finance Industry Warns EU's Benchmark Rules Pose 'Systemic Risk'; Trade groups say EU proposals could disrupt financial markets; Rules are a response to Libor scandal, benchmark manipulation
Greg Ritchie and Libby Cherry -Bloomberg
A consortium of financial trade associations rallied against proposed European Union regulations that would restrict the use of financial benchmarks, warning they could disrupt markets and even pose a systemic risk. The group, spearheaded by the International Swaps and Derivatives Association, are pushing against a blanket ban against foreign benchmarks that don't qualify with the EU's requirements. Instead, they argue benchmarks should be banned on a case-by-case basis.
/jlne.ws/3JOOEKG
Melvin Hedge Fund Probed by SEC Over Risk Controls, Client Communications
Matt Robinson, Katherine Burton, and Hema Parmar - Bloomberg
Melvin Capital Management, the hedge fund that Gabe Plotkin closed earlier this year, is being investigated by the US Securities and Exchange Commission over whether the firm misled investors about its risk controls and intentions to recoup losses on its wrong-way bets on meme stocks, according to people familiar with the probe.
/jlne.ws/3QoytGo
| | | | | | Strategy | | | Hedge Funds Won't Want to Hear This
Julie Segal - Institutional Investor
Evidence is piling up that allocators may be better off replicating the returns of the best hedge funds â a more complex version of indexing â rather than investing in them directly.
The finding grew out of research from Markov Processes International into the performance of a benchmark that it developed eight years ago. Although the study is small, its conclusions are a challenge for the hedge fund industry, which has long argued that its active managers shouldn't fall victim to indexing and cheaper alternatives.
/jlne.ws/3SOB0ey
| | | | | | Miscellaneous | | | Commerzbank Uses Star Wars to Explain 'Bad Feeling' in Bonds
Tasos Vossos - Bloomberg
"I've got a bad feeling about this." The famous Han Solo catchphrase is how Commerzbank AG strategist Marco Stoeckle sees the bond market.
European credit markets have rallied since June, but the moves don't make a lot of sense given that manufacturers are facing skyrocketing energy prices and Germany is tipping toward recession, wrote Stoeckle, the bank's head of corporate credit research, in a report on Friday.
/jlne.ws/3zVPSPF
****JB: Just because I am a Star Wars fan.
Best Way to Measure Inflation Rates? The Mysterious Price of Mayonnaise
Tracy Alloway - Bloomberg
Last year, Pete Strates sat down with a local reporter to talk about the challenges of running a restaurant in the post-pandemic era.
What started as a conversation about the difficulty of hiring workers morphed into one about the increasing price of mayonnaise. The creamy condiment, Strates told NBC affiliate WXII, was costing him $200 more per week.
/jlne.ws/3QEfY0n
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