| July 25, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | David Prosperi did not stay "retired" very long. He has been named as executive vice president and managing director of KemperLesnik, a Chicago-based public relations, brand activation and events agency. Prosperi will oversee the public relations and content businesses for KemperLesnik and report to CEO Steve Skinner, the son of Sam Skinner, former U.S. Secretary of Transportation and White House Chief of Staff under President George H. W. Bush. Congratulations to David on his new position. I hope he still has time to be on our advisory committee. ~JJL
| | | | | | Lead Stories | | | 'I'm so bearish that I'm bullish?'
Harriet Agnew - Financial Times
There is certainly no shortage of reasons for investors to feel gloomy at the moment: no end in sight to the war in Ukraine, high energy prices, soaring inflation, rising interest rates, lingering Covid . . .
The growing risk that all of this will drag leading economies into recession has spoked large institutional investors, writes Chris Flood in London. As a group, they have chopped their allocations to equities to the lowest level since the collapse of Lehman Brothers in September 2008, according to Bank of America's widely followed monthly fund manager survey.
/jlne.ws/3S0Bfmp
Chicago Fed's Activity Index Remains Negative for Second Month
Bloomberg
The Federal Reserve Bank of Chicago's National Activity Index held at minus 0.19 in June, the first back-to-back negative readings since the pandemic started in early 2020.
The three-month average, which smooths out monthly volatility, slipped to minus 0.04 in June from 0.09 a month earlier. Periods of economic expansion have historically been associated with an average higher than minus 0.7, according to the Chicago Fed.
/jlne.ws/3J7EXXG
Bargain-hunting hedge funds boost oil positions
John Kemp - Reuters
Portfolio investors purchased oil futures and options for the second week running as at least some fund managers concluded that expectations of a recession and a recent sell-off were overdone.
Hedge funds and other money managers purchased the equivalent of 31 million barrels in the six most important petroleum futures and options contracts in the week ending on July 19.
/jlne.ws/3Owtxxp
The Fed will eventually choose propping up growth over fighting inflation and will start cutting rates next year, says BlackRock
Jennifer Sor - Business Insider
That means the central bank will cut rates next year after overtightening, analysts predicted."What's our bottom line? We expect more volatility, so we focus on nimble, tactical positioning."
The Federal Reserve will have to pivot from its tightening policy and begin cutting interest rates in 2023, analysts from BlackRock said.
/jlne.ws/3owdhCi
Fed will cause 'acute damage to growth' in its inflation battle before pivoting, warns BlackRock
Christine Idzelis - MarketWatch
The market's view of interest rate hikes faces more volatility as long as central banks think they can tame high inflation without "crushing growth," according to BlackRock, the world's largest asset manager.
"We see more volatility ahead until central banks take sides in the stark trade-off between growth and inflation they are facing," said strategists at BlackRock Investment Institute in a note Monday. "We think the Fed will overtighten rates and cause acute damage to growth before pivoting."
/jlne.ws/3b2vCn9
U.S. stocks continue to struggle for direction as investors await earnings and Wednesday's Fed decision
Vivien Lou Chen and William Watts - MarketWatch
U.S. stocks flipped between modest gains and losses into Monday afternoon as investors contemplated a week stuffed with monster earnings and a Federal Reserve policy meeting that's expected to deliver another outsize rate hike.
/jlne.ws/3PAu2bi
Booming ETFs That Worry Wall Street SEC Watchdogs Rake In Billions
Katherine Greifeld and Emily Graffeo - Bloomberg
Traders are splurging billions of dollars on "complex" ETFs to ride out the crushing bear market across assets -- just as Wall Street watchdogs threaten intrusive measures to limit retail participation.
Issuers including ProShares Advisors LLC, Direxion and Innovator ETFs have been flooded with nearly $24 billion of inflows this year into these typically derivatives-powered exchange-traded funds. Investors are navigating the crash in everything from stocks and crypto to fixed income by using the ETFs to bet on more pain or to nab outsize returns during market rebounds.
/jlne.ws/3PB4efc
| | | | | | Exchanges | | | CME Group Announces Record Copper Options Open Interest
CME Group
CME Group, the world's leading derivatives marketplace, today announced that open interest in Copper options surpassed 100,000 contracts on July 21, 2022, reaching an all-time record after multiple back-to-back open interest record days throughout the week. "Seen as a bellwether for the global economy, market users are turning to our Copper options to manage risk as expectations for an economic slowdown continue to increase," said Jin Chang, Global Head of Metals at CME Group. "Our clients clearly value the defined risk/reward structure of our Copper options that provide an effective way to manage adverse price movements, as reflected in recent volume and open interest. We look forward to continuing to provide enhanced solutions across global base metals markets."
/bit.ly/3Oxxl1D
NYSE Arca Options Pillar Migration - Market Maker Quote Processing during an Auction Processing Period
NYSE
Beginning on Monday, July 25th, for Market Marker Quotes ('Quotes') received before the Auction Processing Period ('Auction') in symbols that have migrated to the Arca Options Pillar trading platform, the Exchange will no longer accept order instructions to cancel, cancel/replace or otherwise modify Quotes, when such order instructions arrive during the Auction or the transition to continuous trading. Instead, the Exchange will reject such order instructions. At the end of the Auction, the Exchange will cancel any same-side Quotes sent from the same order/quote entry port of the Market Maker.
/bit.ly/3LUpTgO
Trading in STOXX, DAX listed derivatives jumps in 1H 2022 amid market volatility
Qontingo
Trading in STOXX and DAX derivatives on Eurex had one of the busiest periods in the past decade during the first half of 2022, as investors turned to the instruments to hedge and manage portfolios amid a broad market sell-off. Over 450 million futures and options linked to a STOXX or DAX index traded between January and the end of June this year, the third-highest volume for any calendar half-year period going back to 2012. Only the first half of 2020, when COVID-19 hit markets, and the first half of 2016, when Brexit shocked market participants, saw more activity in the contracts, Eurex data show.
/jlne.ws/3BfkdeA
| | | | | | Regulation & Enforcement | | | United States: The Joint Audit Committee In The Post-Archegos Risk Management Landscape
Stephen R. Morris - Mondaq
Regulatorsâincluding the Federal Reserve, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission and the Joint Audit Committeeâare increasingly focusing on the terms and conditions of account agreements under which banks, broker-dealers and futures commission merchants' contract with their customers, and in particular on terms and conditions relating to limits, the right to call for margin, limited recourse, and grace periods that may toll the right to exercise remedies upon a default. This focus derives from legitimate risk management concerns. The market crash in March 2020 and the ensuing weeks of volatility, and then, a year later, the default of Archegos Capital Management, spurred regulatory and supervisory assessments and reviews of risk management practices across the industry.
/bit.ly/3cEZGpw
Gary Gensler has set the SEC on a perilous path
Gina Chon - Reuters
Gary Gensler is the kind of regulator who gets things done. That's not always the kind that serves America best. The chair of the Securities and Exchange Commission has flexed the rulemaking process in a way that has been helpful to a Democrat-led administration struggling to pass laws. The precedent Gensler has set will make it easier for future SEC bosses to play fast and loose too.
/jlne.ws/3PVUyLM
| | | | | | Strategy | | | Funds continue pulling out of CBOT corn as futures stay under pressure
Karen Braun - Reuters
Speculators have sold Chicago corn in 11 of the last 13 weeks after maintaining huge long positions for the better part of two years, and now their bullish bets are just one-third as large as the year's high.
Last week's story was very similar to the previous week, where corn futures rose and then fell within the period, but the selling was clearly heavier on the way down than any buying on the way up.
/jlne.ws/3cGmrcs
| | | | | | Miscellaneous | | | Personal Wealth: Gen Z Thinks 'The Money Will Come Back' on TikTok. Will It?
Erin Lowry - Bloomberg
Our current crop of 20-somethings â the majority of whom are Generation Z â have apparently caught on to the time-honored tradition of "living it up" while young and not worrying about money.
A social-media trend that's recently taken over TikTok features people sharing video or photos from traveling abroad with the overlaying text: "I'll make my money back, but I'll never ..." The blank at the end goes something like "... be 20 and swimming on a secluded beach in Albania again."
/jlne.ws/3z3NJkJ
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