| August 16, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |  Navigating the Future of Clearing: Insights from Anthony Attia at FIA's IDX JohnLothianNews.com In a bustling conference hall at the FIA's IDX event, Anthony Attia, a prominent figure in the European clearing industry, shared his insights on the evolving landscape of risk management and clearing house operations. The air was thick with anticipation as industry leaders gathered to discuss the future of financial markets. Watch the video »
| | | | | | Lead Stories | | | Panic Over: VIX 'Fear Gauge' Drops Sharply as Market Mayhem Abates
Gunjan Banerji - The Wall Street Journal
The Cboe Volatility Index, or VIX, has plunged 23 points over the past eight trading sessions, the largest such decline since November 2008.
The steep slide highlights how quickly fear has dissipated from markets, after a meltdown this month left traders on edge.
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NYSE, Nasdaq withdraw 3 more requests for crypto ETF options rule changes; Activity keeps heating up around Bitcoin and Ether ETF options.
Alex O'Donnell - Cointelegraph
New York Stock Exchange (NYSE) American and Nasdaq International Securities Exchange (ISE) withdrew three more requests for rule changes related to listing options on Bitcoin and Ether exchange-traded funds (ETFs), according to regulatory filings submitted after market close on Aug. 14 and 15.
The withdrawals are the latest in a flurry of activity surrounding spot BTC and ETH ETF options in the United States. On Aug. 13, NYSE Arca withdrew another requested rule change intended to chart a path toward listing crypto ETF options.
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Wall St wraps up best week of the year as recession fears fade
Stephen Culp - Reuters
U.S. stocks ended higher on Friday, extending their biggest weekly percentage gains of the year as worries of an economic downturn eased and investors focused on the Jackson Hole Economic Symposium next week.
The S&P 500 and the Nasdaq notched their seventh straight session of gains, as stocks recouped losses from a tailspin two weeks ago. The sell-off, sparked by weak economic data and heightened recession fears, confirmed the Nasdaq had entered correction territory.
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Carry Trade That Blew Up Markets Is Attracting Hedge Funds Again; Yen shorts have risen around 30 to 40% in past week, ATFX says; Any hint of BOJ keeping rates on hold may embolden yen sellers
David Finnerty and Ruth Carson - Bloomberg
A popular yen-centered carry trade that blew up spectacularly two weeks ago is staging a comeback. Japan's currency has weakened more than 5% against the dollar since Aug. 5, when a cocktail of hawkish Japan monetary policy moves, jitters around US earnings and a feeble jobs report catapulted the yen to a seven-month high.
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A Loss-Making $872,000 Investment That's Putting India's Markets Chief on the Defensive; Buch's liquidated investment seized on by Hindenburg in salvo; Tenure extension is threatened by political fallout: sources
Advait Palepu, Chiranjivi Chakraborty, and Ruchi Bhatia - Bloomberg
A nearly decade-old personal investment is coming back to haunt India's top market regulator just months before the government faces a decision on whether to renew her tenure. The money-losing $872,762 investment by Securities and Exchange Board of India chief Madhabi Puri Buch and her husband was thrust into the spotlight this month by Hindenburg Research LLC, the US short seller that's one of the parties being queried by the regulator over its campaign against the Adani Group.
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Capula, Schonfeld, Point72 Among Hedge Funds Riding Bitcoin ETFs; Millennium trimmed stakes but remains among the top holders; 701 new funds reported positions in spot-Bitcoin ETFs
Isabelle Lee - Bloomberg
Hedge funds, pensions and banks continued to lavish capital into exchange-traded funds that invest directly in Bitcoin, as more traditional investors embrace the asset class that US regulators begrudgingly helped push into the mainstream at the beginning of the year. Among the most well-known buyers that have emerged are hedge funds like Millennium Management, which held shares in at least five Bitcoin ETFs, according to a Bloomberg analysis of second-quarter filings with the US Securities and Exchange Commission. The firm, which has $68 billion in assets under management, trimmed its stakes in the ETFs significantly from the prior quarter but remained as the top holder for most of the funds, including BlackRock's iShares Bitcoin Trust (ticker IBIT).
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Wall Street Just Got Its Most Volatile ETF as Risky Bets Boom; MicroStrategy 1.75x leveraged ETF is most volatile in US: BI; More issuers looking to push the envelope, says BI's Balchunas
Vildana Hajric and Isabelle Lee - Bloomberg
In a part of the US market for exchange-traded funds that has become known for increasingly risky products, a new offering has debuted that stands out in the crowd. Defiance, a $1.4 billion asset manager, on Thursday launched the Defiance Daily Target 1.75X Long MSTR ETF under the ticker MSTX. The fund looks to offer daily leveraged returns on MicroStrategy Inc. The stock, which has been seen as a Bitcoin proxy because of the company's holdings of the digital token, has a 90-day volatility of about 97%. That would likely make the new ETF the most volatile in the US, according to Bloomberg Intelligence. For comparison, the same volatility measure comes in at 66% for Tesla Inc. - another stock prone to sizable swings - and 63% for Nvidia Corp., data compiled by Bloomberg show. For SPY, the giant State Street fund that tracks the S&P 500 Index, it's 14%.
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Wall Street Births a New Breed of Volatile, One-Day-Only Funds; There's plenty to debate about when it comes to these high-octane ETFs
Katie Greifeld - Bloomberg
The US exchange-traded fund market welcomed its most volatile offering yet this week - the Defiance Daily Target 1.75X Long MSTR ETF (ticker MSTX) - igniting a flurry of hot takes.
At the heart of the matter is that MicroStrategy, which is nominally a software company but is best known for buying massive amounts of Bitcoin, already behaves like a leveraged ETF. The stock's 90-day volatility is a stunning 97%. Bloomberg Intelligence estimates that means there's a two-thirds chance MSTX could go up or down 168% in the next 12 months.
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Gold extends record run as broad market volatility lures buyers; Prices for the metal score a 2.6% weekly gain
Myra P. Saefong - MarketWatch
Prices for gold on Friday tallied their 28th all-time settlement high for the year so far, with the precious metal finding support as market volatility this month attracted buyers to the "safety" of gold.
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| | | | | | Exchanges | | | Eurex default fund reshuffle leaves members frustrated; Clearing members say concentration margin add-ons would be fairer than buffer on all portfolios
Paulina Pielichata and Rebekah Tunstead - Risk.net
Eurex Clearing has unveiled a new default fund methodology to address potential shortfalls highlighted by regulators amid heavy market volatility in recent years. But several clearing members feel the central counterparty (CCP) has taken the wrong approach to solving the right problem. "We are actually quite irritated about it," says a clearing executive at a global bank. "Basically, they started noodling about with this idea last September, but didn't really disclose it to clearing members."
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| | | | | | Regulation & Enforcement | | | Connamara Technologies' EP3 Exchange and Clearing Platform Powers Interactive Brokers' ForecastEx Predictions Exchange
Connamara Technologies
ForecastEx successfully launched its innovative predictions exchange for contracts on US economic and global climate events on August 1st, backed by Connamara Technologies' fully integrated EP3 exchange and clearing technology. ForecastEx, a wholly owned subsidiary of Interactive Brokers Group, Inc. (Nasdaq: IBKR), is licensed by the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO). US economic events offered on ForecastEx include Unemployment Claims, Consumer Price Index, Retail Sales, Fed Funds, Housing Starts, and others. Global climate events include temperatures and atmospheric CO2.
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| | | | | | Strategy | | | Deutsche Bank CIO Urges Tail-Risk Hedging Despite Market Calm; Geopolitical risks threaten to drive new spikes in volatility; Markets 'no longer priced to perfection,' Nolting says
Natalia Kniazhevich - Bloomberg
Calm has been restored to Wall Street as US stocks resumed their climb this week but Deutsche Bank AG says investors still need to gird their portfolios against future wild asset swings. "We expect volatility to stay at higher levels due to seasonality and change in markets which are no longer priced to perfection," said Christian Nolting, Deutsche Bank's global chief investment officer. Expectations have been reset after the once unstoppable equities rally stumbled on a weak jobs report and "good news is now good news and bad news is bad news."
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History shows investors should keep a tight leash on risk once the Fed cuts rates, strategist says; Critical information for the U.S. trading day
Jamie Chisholm - MarketWatch
It's expected that a week from today, Federal Reserve Chair Jerome Powell will use his Jackson Hole speech to signal that the central bank is very likely to trim borrowing costs after its policy meeting on September 18.
Recall, that only about 10 days ago some market observers were arguing for an intra-meeting emergency 50 basis point rate cut as a U.S. growth scare contributed to a plunge in global stocks.
Options Trading Concepts Live
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Mike, Nick, Katie, and Thomas take trading questions live on YouTube chat and explain the answers in depth using the tastytrade platform and graphics.
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Robust Rally
Cboe (Video)
Tune in the #RUTreport for @AngieMiles' coverage activity in Russell 2000 #options and what to watch for next week.
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| | | | | | Miscellaneous | | | Citadel's Ken Griffin Has Remade the Hedge-Fund Industry, With Himself on Top; His firm's performance is helping win a war of styles in its corner of professional investing
Peter Rudegeair - The Wall Street Journal
Ken Griffin wants visitors to the offices of his $63 billion hedge-fund firm, Citadel, to have no doubt about its standing atop Wall Street. "#1 Most Profitable Hedge Fund Manager of All Time" reads the message emblazoned on elevator doors at its Miami headquarters. It refers to an unofficial industry ranking Citadel scaled following a one-year record haul of $16 billion in 2022. Griffin is eager to tell the world about that, too. "We made more money than any firm has ever made in the history of capital markets," Griffin said of Citadel and a sister company, Citadel Securities. "This is where people come when they want to change the world of finance."
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The Rout - What a Short, Strange Trip It's Been; There's no single factor to explain the volatility of what just happened in markets. But there are shades of 2008.
John Authers - Bloomberg (Opinion)
What a short, strange trip it's been. Last week started with the worst global market seizure since the first month of the pandemic in 2020. Less than two weeks later, much of the damage has already been fixed. It demands an explanation. There may not be a single one, as markets are complex, but the exercise should tell us a lot.
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