| February 27, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | As Cboe is approaching its 50th anniversary, it shared on LinkedIn the memoir of the late Joe Sullivan, the founding president of the Chicago Board Options Exchange. ~JJL
| | | | | | Lead Stories | | | Investors Are Bracing for Surge in Market Volatility
Eric Wallerstein - WSJ
Fear is creeping back into the stock market. To protect against a potential downturn, traders are scooping up hedges at the fastest clip since the onset of the Covid-19 pandemic.
More call options betting that the Cboe Volatility Index, or VIX, will rise have changed hands on an average day in February than at any time since March 2020, Cboe data shows.
/jlne.ws/3IzhaQf
Bets on Wall Street's Fear Gauge Swell Near March 2020 Levels
Eric Wallerstein - WSJ
Traders are gearing up for the possibility of a big upswing in market volatility soon.
More call options betting that the Cboe Volatility Index, or VIX, will rise have changed hands on an average day in February than at any time since March 2020, Cboe data shows.
/jlne.ws/3IY7BvL
Fed Says Interest Rate Hikes Are Tightening Economy; Wall Street Disagrees
Emily Graffeo - Bloomberg
There's something of a ritual performed each time Federal Reserve Chair Jerome Powell speaks to the press: A reporter asks Powell about financial conditions; he says they've tightened a lot; the Wall Street crowd snickers.
To them, the notion seems ludicrous. Notwithstanding the selloff the past few weeks, markets have rallied in start-and-stop spurts for four months, swelling equity valuations and making it easier for companies to raise cash in stock and bond markets. The implication is that the Fed is letting investors undermine its efforts to choke off the flow of money and tame inflation.
So why such wildly different conclusions?
/jlne.ws/3EJYQD8
Risk of 'wrathful Old Testament - style' reaction from central banks is rising, JPMorgan says
Vivien Lou Chen - MarketWatch
The "gentle and forgiving path" taken by developed-market central banks to rein in inflation over the past year is likely to prove unsuccessful and trigger the need for more forceful, biblical-type action.
That's the view of economists Bruce Kasman, Joseph Lupton and Michael Hanson of JPMorgan Chase & Co., who described the response of central bankers in the past year as embodying "a New Testament - style grace" â in terms of keeping the economic expansion going and tolerating a gradual decline in inflation. Rate hikes so far have been "a correction from inappropriately accommodative stances rather than an attempt to smite out the expansion," they said.
/jlne.ws/3IXYs6d
Here's one bullish factor the stock market can continue to rely on to limit future downside, DataTrek says
Mathew Fox - Business Insider
With the S&P 500 hovering right around the all-important 4,000 level, the index is trading at the same level it did nearly two years ago.
But a lot has changed since then, namely interest rates and growing fears of an economic recession.
/jlne.ws/3ZIbbzR
Israel central bank FX intervention expectations build
Marc Jones and Steven Scheer - Reuters
Expectations mounted on Monday that Israel's central bank could intervene in FX markets to prop up the shekel which has been one of the weakest currencies in the world since plans were laid out to overhaul the judiciary, analysts said.
The shekel has slumped 8% versus the dollar since last month's proposals to give the government greater sway on selecting judges and limit the power of the Supreme Court to strike down legislation.
/jlne.ws/3kt0BOa
Funds seen as net sellers in CBOT corn, wheat, soy so far this month
Karen Braun - Reuters
Speculators ended January extending length in Chicago-traded corn and soybeans and cutting back on bearish wheat bets, though selling may have dominated so far this month, especially late last week.
The U.S. Commodity Futures Trading Commission resumed publication of Commitments of Traders (CoT) on Friday after having been down for nearly a month after a ransomware attack on Ion Markets disrupted collection of data.
/jlne.ws/3IC7QuW
| | | | | | Exchanges | | | Cboe Digital Selected as DMIST Ambassador by FIA
Cboe
Cboe Digital is pleased to announce it has joined the Derivatives Market Institute for Standards, Inc. (DMIST) as an Ambassador. Supported by the Futures Industry Association (FIA), DMIST is an industry-governed standards body focused on improving the efficiency, resiliency, competitiveness and innovativeness of the exchange-traded and cleared derivatives markets. Standards published by DMIST aim to improve the efficiency and resilience of the clearing ecosystem.
/jlne.ws/3SB0eNP
Position Limits - Government Of Canada Bond Listed Products (Spot Month)
TMX
The applicable position limits for the Government of Canada Bond futures and options on the Government of Canada Bond futures have been updated and are reflected in the position limit file. The position limit file is available in Annex 1 and retrievable here. The position limits will apply as follows.
/jlne.ws/3EFXwkH
| | | | | | Regulation & Enforcement | | | Don't let crypto burn?
Robin Wigglesworth - Financial Times
What should be done about the crypto clown car crash? Should regulators step in and bring some basic oversight and impose clear rules on the industry, or merely laugh, shrug and let the whole thing burn?
Last week the IMF made its position clear (ish).
/jlne.ws/3EBAMSP
| | | | | | Strategy | | | Data To Watch This Week
Cboe (Video)
In today's #Vol411, Joel Hawthorne @louiswinthrop runs through the most actively traded $SPX & $VIX #options
/jlne.ws/3m5K8jf
| | | | | | Education | | | What Are Zero-Day Stock Options and Why Do They Matter? QuickTake
Lu Wang - Bloomberg
Trading in equity options can be life in the fast lane compared with trading stocks themselves, offering investors big and small a quick road to riches paved with risk. As a form of derivatives, options have traditionally been the domain of Wall Street pros. But retail investors plunged in during the pandemic, and positions began getting opened and closed at a frantic pace. More than 40% of the S&P 500's trading volume is made up of what's known as "zero-day-to-expiry" options (0DTE) â a kind of trading that's once again dominated by institutional investors. To some, recent bouts of volatility show that the zero-day options can wield an outsize influence on the larger equity marketplace, a dynamic known as the tail wagging the dog. Marko Kolanovic, a widely followed strategist at JPMorgan Chase & Co., went as far as warning that the 0DTE mania is putting the market at risk of a serious meltdown.
/jlne.ws/3Y3XqKk
| | | | | | Miscellaneous | | | Why Warren Buffett Doesn't Worry Much When the Market Goes Down.
Brian Swint - Barron's
The market rally that looked so promising is running out of steam.
The S&P 500 has now finished lower three weeks in a row. The Dow Jones Industrial Average has given up its gains for the year. Volatility is rising, along with demand for put options to protect against losses. The hope that "as goes January, so goes the year" is looking like a meaningless aphorism.
/jlne.ws/3ZniDju
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| | | Jeff Bergstrom
Editor
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