| April 11, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Get ready for the great unwinding
Philip Coggan - Financial Times
The recent turmoil in financial markets is a sign of a longer term problem. More than a year after Russia's invasion of Ukraine, inflation has proved to be far from transitory. That has meant government bond yields, while volatile, have shown no sign of dropping back to the historic lows reached in the past decade.
The knock-on effects have been seen in the past few weeks' banking sector turmoil after losses on long-term bonds triggered the collapse of Silicon Valley Bank. The loss of confidence in the sector spread, leading to the takeover of Credit Suisse by UBS and an emergency funding deal for First Republic. It seems as if the great speculative era has ended, and a new phase, the great unwinding, has begun.
/jlne.ws/3ZU9nDm
Too soon to know if recent bank troubles are isolated events, IMF says
Greg Robb - MarketWatch
It is too soon to know for sure whether the recent bank failures in the United States and the merger of Credit Suisse with UBS were isolated events or a harbinger of future troubles, the International Monetary Fund said Tuesday.
While market anxiety has been reduced in recent days, market sentiment remains "fragile" and strains are still evident, the international financial institution said, in its latest report on global financial conditions.
"Concerns remain about vulnerabilities that may be hidden," not just at banks, but in the shadow banking sector, the report said.
/jlne.ws/3zQLnq4
Column: OPEC+ surprise squeezed oil shorts
John Kemp - Reuters
Investors bought petroleum futures and options at the fastest rate for more than three years after Saudi Arabia and other OPEC+ producer group members announced voluntary cuts in oil output.
Hedge funds and other money managers bought the equivalent of 128 million barrels in the six most important petroleum futures and options contracts over the seven days to April 4.
/jlne.ws/3o39zmw
| | | | | | Regulation & Enforcement | | | Goldman Sachs Paying $15 Million to Settle Investigation of Swaps Business
Dave Michaels - The Wall Street Journal
Goldman Sachs Group Inc. agreed Monday to pay $15 million to settle regulatory claims that it obscured the cost of derivatives that clients purchased to bet on or against an index of overseas stocks. The Commodity Futures Trading Commission said Monday that Goldman in 2015 and 2016 didn't tell clients that it priced swaps in a way that put them in a disadvantageous position. The swaps contracts were tied to an index of stocks from Japan, Europe, Hong Kong, Singapore, New Zealand and Australia, the CFTC said.
/jlne.ws/3mw9Vl7
***** Here is The Trade's version of the story.~JJL
| | | | | | Strategy | | | If The VIX Stays Low, This Option Trade Profits
Gavin McMaster - Investor's Business Daily
Nothing like a few bank failures to stoke investors' fears. But if those fears have mostly subsided, how can we set up an option trade to profit? Here is a broken-wing butterfly on the VIX with little money at risk to the upside if the VIX should spike again.
/jlne.ws/3mtTXYY
Charles Schwab: Short-Duration Stocks Will Outperform Amid High Rates
Jennifer Sor - Markets Insider
Stocks have been throttled by high volatility and rising interest rates over the past year, but there's an area of the market that could outperform as long as rates stay high, Charles Schwab said.
"If central banks merely stop hiking and hold rates steady (or cut marginally) at relatively elevated levels, then short-duration stocks may resume their outperformance," chief global investment strategist Jeff Kleintop said in a note on Monday, referring to companies with immediate potential for cash-flow generation.
/jlne.ws/41CCYTh
Continued Consolidation
Cboe (Video)
Tim Biggam talks about the $VIX Index hanging around that 19 level, #VIX futures in contango and the outlook for #markets with another Fed meeting & earnings on the horizon. #SPX $SPX #options #trading #Vol411
/jlne.ws/40YMpML
| | | | | | Miscellaneous | | | Bankers Use Secrecy, Confidential Investor Talks to Complete Stock Deals
Drew Singer - Bloomberg
Bankers are increasingly using confidential talks with investors to ensure that their US initial and secondary public offerings are successful as market conditions become more challenging.
At first glance, the practice seems unfair to the traders who are left out of the secret conversations. But dealmakers say the strategy is legal, when done properly, and crucial for getting deals completed in an economy that's on the brink of a recession.
/jlne.ws/3MCITDy
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| | | Jeff Bergstrom
Editor
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