| February 10, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Options market sceptical ahead of CPI data
Medha Singh - Reuters
The U.S. options market are not reflecting the same level of complacency as the stock market ahead of the U.S. inflation report, warned Michael Oyster, chief investment officer of Chicago-based Options Solutions.
The S&P 500 (.SPX) is about 4.5% away from its all-time closing high but the CBOE volatility index (.VIX), Wall Street's fear gauge, is hovering at its long term average of 20 points.
This, Oyster noted, indicates that the "options market is exhibiting a healthier dose of scepticism than the stock market."
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US stocks and Treasuries drop after inflation hits 40-year high
George Steer - Financial Times
Wall Street stocks and government bond prices fell on Thursday after data showed the rate of US inflation hit a fresh 40-year high in January.
The broad-based S&P 500 index was down 0.3 per cent at midday in New York, having dropped 1 per cent in opening trade. The technology-heavy Nasdaq Composite was down 0.4 per cent, after falling 1.5 per cent in early dealings.
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Bill Miller Said More Volatility Is Coming and Backed Meta Stock
Harry Robertson - Business Insider
Investing legend Bill Miller said more volatility is coming for stocks, that Facebook parent Meta is now undervalued, and that Peloton is on his radar in an interview with CNBC Wednesday.
Miller's reputation was cemented by the performance of his Legg Mason Capital Management Value Trust fund, which beat the S&P 500 for 15 consecutive years from 1991 to 2005.
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U.S. Inflation January 2022: Consumer Prices Jump 7.5%, Fastest Since 1982
Reade Pickert - Bloomberg
U.S. consumer prices surged in January by more than expected, sending the annual inflation rate to a fresh four-decade high and adding more urgency to the Federal Reserve's plans to start raising interest rates.
The consumer price index climbed 7.5% from a year earlier following a 7% annual gain in December, according to Labor Department data released Thursday. The widely followed inflation gauge rose 0.6% in January from a month earlier, reflecting broad increases that included higher food, electricity and housing costs.
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Investors gird for more hawkish Fed after sharp inflation rise
Devik Jain, Davide Barbuscia and Chuck Mikolajczak - Reuters
Investors were bracing for more market volatility after a sharper-than-expected rise in consumer prices ramped up expectations for how aggressively the Federal Reserve will need to move as it fights to tame soaring inflation.
The prospect of a more hawkish Fed has been the main theme for markets this year, sending U.S. yields higher and stocks lower. The yield on the 10-year Treasury yield has now moved up some 50 basis points in 2022 alone as it hit 2% on Thursday, its highest in two-and-a-half years.
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Natural Gas Has Seen Big Price Swings. Why Investors Should Buckle Up.
Myra P. Saefong - Barron's
The natural-gas market has seen some notably large day-to-day price moves since the start of the yearâand that's not just because of the weather.
The volatility has also been driven by pandemic-affected demand swings and an increasingly "interdependent" world supply chain for pipelines and liquefied-natural-gas transport, as well as the push toward renewables, says Phil Kangas, advisory leader for natural resources and mining at Grant Thornton.
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Retail Investors' Influence on Stock Market Falls As Meme-Stocks Fade
Matthew Fox - Business Insider
Retail investors' influence over the stock market is declining as they ditch trading individual stocks and risky options in favor of more traditional equity funds, JPMorgan said in a Wednesday note.
The bank found that Robinhood's share of stock market transactions in December fell to levels not seen since before the COVID-19 pandemic. A decline in trading activity was also observed at other retail brokerage firms, including E*Trade and Schwab, according to the note.
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Beware the algorithms driving up oil prices
Gillian Tett - Financial Times
This week, White House diplomacy has been focused on Ukraine and the threat of war. Yet US president Joe Biden still found time to place a stage-managed call to King Salman of Saudi Arabia, in which they reaffirmed a joint commitment "to ensuring the stability of energy supplies".
No wonder. Oil prices have recently jumped to more than $90 a barrel, for both the Brent and West Texas Intermediate benchmarks, their highest level for seven years.
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| | | | | | Exchanges | | | BoE's Bailey sees no need for EU time limit on euro clearing access
David Milliken - Reuters
The European Union should not have set a time limit on how long clearing houses in Britain can continue serving customers in the bloc, Bank of England Governor Andrew Bailey said on Thursday.
Bailey told an annual dinner for British financial services lobby TheCityUK that he welcomed this week's EU decision to extend temporary equivalence - allowing EU access for Britain's derivatives clearing houses - by three years to June 2025.
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Euronext publishes Q4 and full year 2021 results
Euronext
Strong revenue growth, driven by solid organic performance of non-volume related activities and significant contribution from acquisitions. 2021 costs guidance over- achieved and first delivery of synergies from the Borsa Italiana Group integration.
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| | | | | | Regulation & Enforcement | | | Stock-Trading Ban for Members of Congress Gains Traction
Siobhan Hughes - WSJ
House Speaker Nancy Pelosi said she expected Democrats to reach consensus on restricting stock trading by members of Congress and called for new rules for federal judges, as proposals competed for bipartisan support.
"It's complicated, but members will figure it out," she said. "I assume they'll have it pretty soon," the California Democrat said, referring to the House Administration Committee tasked with reviewing the proposals. She also wanted any legislation to also require financial disclosures from the judiciary, including Supreme Court justices. "It has to be governmentwide," she said.
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SEC Floats Giving Activist Investors Less Time to Report Positions
Paul Kiernan - WSJ
The Securities and Exchange Commission proposed Thursday to shorten the window for shareholders to alert the market when they build an ownership stake of more than 5% of a company's stock, a likely setback to activist investors.
The proposed rule would reduce the deadline for disclosing such equity positions to five days from 10 days, among other changes, the SEC said. It would also deem holders of some derivative securities to be "beneficial owners" of the underlying company's stock if the instruments are held "with the purpose or effect of changing or influencing the control of the issuer."
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| | | | | | Strategy | | | Volatility ETFs Jump on Uncertain Fed Response to High Inflation
Max Chen - ETF Trends
The CBOE Volatility Index and VIX-related exchange traded funds climbed Thursday as investors dumped risk assets on uncertainty over the Federal Reserve's reaction to accelerating headline inflationary pressures.
Among the best-performing non-leveraged ETFs of Thursday, the iPath Series B S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) increased 8.6%, and the ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) advanced 8.4%. Meanwhile, the CBOE Volatility Index climbed 19.4% to 23.8, breaking back above its short-term resistance at the 50-day simple moving average.
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These 2 stock-market trends need to reverse to disprove a bearish scenario
Lawrence G. McMillan - MarketWatch
The S&P 500 index is having trouble sustaining a rally, despite having seen massive oversold conditions in late January.
The S&P SPX, -1.67% had the obligatory oversold rally which has carried it back to, and slightly above, its declining 20-day moving average - to the 4600 level. That is a typical rally in a bearish market.
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Why hedge-fund manager Doug Kass says his bearish case is now stronger and dip buyers should bide their time
Barbara Kollmeyer - MarketWatch
For equity dip buyers still waiting in the wings, hedge-fund manager Doug Kass suggests holding fire for now as better bargains, and unfortunately worse times, are ahead.
"It is my view that the odds favor that the rally over the last two days of January and into the first week of February, may have been a Bear Market rally and the first shot across the market's bow - providing a great trading opportunity but not likely the basis for a new Bull Market leg," said the president of hedge fund Seabreeze Partners Management, in a note to clients.
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Tyson Foods May Have Solved Inflation. How to Play It With Options.
Steven M. Sears - Barron's
The holy grail for Corporate America is having a product that is so intensely desired that people will pay almost any price to get it under any circumstance. Any company in such an extraordinary commercial position could be insulated from the ravages of economic cycles.
Many people wouldn't think that chicken, pork, and beef would qualify for such status, but the most recent earnings report from major meat producer Tyson Foods (ticker: TSN) suggests that demand for meat is so intense that people are at least insensitive to price increases.
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| | | | | | Miscellaneous | | | JPMorgan estimates bitcoin's fair value
Suban Abdulla - Yahoo Finance
The valuation comes after bitcoin finally shrugged off weeks of blues earlier this week, breaking the key $40,000 threshold for the first time in almost a month. Photo: Chesnot/Getty Images
For the first time ever, US investment bank JPMorgan Chase & Co (JPM) has attempted to evaluate the world's largest cryptocurrency, bitcoin (BTC-USD). The "fair value" of the crypto world's so-called liquid gold is around 12% below its current price. This is based on bitcoin's volatility in comparison with gold, JPMorgan said.
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***** You have been measured and found wanting.~JJL
The Fear Index â Sky's new financial thriller is a dizzying rush; This frenetic four-parter starring Josh Hartnett centres on an AI system that can predict fluctuations in the market
Dan Einav - FT
Sky's new thriller mini-series, The Fear Index, follows Dr Alex Hoffman (Josh Hartnett), a maverick computer scientist who has developed an AI system that can anticipate unforeseen fluctuations in the financial market by studying reactions to fear. The pioneering algorithm is guided by his theory that people behave in "predictable ways when they're frightened"; accordingly, it makes projections based on reports in the media that are indicative of, or likely to trigger, global waves of anxiety.
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***** I see a Cboe advertising campaign coming on.~JJL
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| | | Jeff Bergstrom
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