| September 23, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Pound-Dollar Parity Now a One-in-Four Chance, According to Options Bets; Sterling drops toward $1.10 handle and bearish wagers pick up; UK bonds plunge at the prospect of more fiscal stimulus
Vassilis Karamanis - Bloomberg
Can the pound reach parity versus the dollar? It's now a one-in-four chance when it comes to options pricing. The UK currency is heading for its biggest daily loss since early May after Chancellor of the Exchequer Kwasi Kwarteng outlined the government's plans to stimulate the economy with tax cuts and spending. The simultaneous sharp sell off in Gilts suggests that tackling inflation will be a very hard task for UK authorities and that the currency market sees no easy way out for the Bank of England.
/jlne.ws/3C1HbFQ
VIX, Wall Street's 'Fear Gauge,' Tests Three-Month High
Eric Wallerstein - WSJ
Surging bond yields and a broad-based market selloff are spooking investors into buying near-term protection, sending Wall Street's "fear gauges" to their highest levels in months.
The Cboe Volatility Index (VIX) moved above 30 in Friday trading, a level it hasn't closed above since June 21. The VIX tracks traders' expectations for stock swings over the next 30 days through options prices, and many have marveled at how subdued it's been amid a cross-asset class bear market.
/jlne.ws/3r12dOu
Investors should brace for 'unsettling volatility' and the S&P 500 is headed back to June lows as dysfunction is growing across markets, Mohamed El-Erian says
Jennifer Sor - Business Insider
The top economist predicted the S&P 500 could retest June lows due to signs of dysfunction in US Treasuries and money markets.He warned investors not to ignore the gloomy macro backdrop, despite some attractive stock names.
Investors need to brace themselves for "unsettling volatility," and the S&P 500 could head back to June lows, top economist Mohamed El-Erian said, warning of upcoming turbulence to stocks.
/jlne.ws/3LHmthY
Wall St Week Ahead 'Uncharted' sell-off in U.S. stocks has investors wondering when the pain stops
David Randall - Reuters
A week of heavy selling has brought U.S. stocks and bonds to fresh bear market lows, with many investors bracing for more pain ahead.
Across Wall Street, banks are scrambling to adjust their forecasts to account for a Federal Reserve that shows no evidence of letting up in its fight against inflation after delivering another market-bruising rate hike this week and signaling more severe monetary policy tightening ahead.
/jlne.ws/3feG50L
Europe Stoxx 600 Index Set to Enter Bear Market on Recession Fears
Sagarika Jaisinghani and Macarena Munoz Montijano - Bloomberg
Europe's Stoxx 600 Index joined US and regional peers in a bear market as fears of a looming recession hammered demand for risk assets.
The index sank 2.3% by the close in London, to the lowest level since December 2020. Total declines from a January record high are now 21%, confirming a technical bear market.
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| | | | | | Exchanges | | | Cboe Proposes Tick-Reduction Framework to Ensure Market Structure Benefits All Investors
Cboe
At Cboe, we strongly believe that fair and competitive markets provide a level playing field for all participants. As the U.S. Securities and Exchange Commission (SEC) explores equity market structure changes, we believe it is important that any resulting reforms are measured, evidence-based and truly beneficial to all investors.
Minimum pricing increment, or tick size, is one of the key components of the current U.S. equities market structure reform effort. Current Regulation National Market System, or Reg NMS, Rule 612 dictates that the minimum quotation increment for securities quotations of $1.00 or more is one cent. There is growing concern among some market participants that the present structure contributes to an uneven playing field and market inefficiencies.
/jlne.ws/3BHqJZX
StoneX Offers Clients Access to Environmental Options & Futures Contracts via Nodal Exchange
CISION
StoneX Group Inc. (NASDAQ: SNEX) today announced that clients of its subsidiary StoneX Financial Inc. can now access the full suite of physically deliverable environmental futures and options contracts via the Nodal Exchange, enabling StoneX clients to implement and sustain environmentally conscious business practices, effectively manage risk, and maintain regulatory compliance. These contracts span markets that include sustainable energy, carbon emissions, renewable fuels, and pollutants such as sulfur dioxide and nitrogen oxide.
/jlne.ws/3SrUK6Z
CME Becoming DraftKings of Exchanges in Meme Stocks Craze
Jared Dillian - Bloomberg
One of the world's largest derivatives exchanges is making a dangerous play for retail investors.
CME Group Inc. plans to offer the trading masses options to punt on whether stocks, gold, oil - or virtually any other asset - will rise on a given day. These will be yes/no contracts, such as: do you think stocks will rise today? If you answer "yes," and the market finishes up, the contract pays off. If you answer "yes," and the market goes down, the option expires worthless. Contracts like these have been popularized by sports- and politics-betting sites. And so, with every passing day, the markets asymptotically approach the financial sophistication of DraftKings Inc.
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| | | | | | Regulation & Enforcement | | | CFTC Charges Five Entities for Failing to Register as FCMs
CFTC
The Commodity Futures Trading Commission today announced it has filed charges against five entities for operating as unregistered futures commission merchants (FCM). The entities, which claim to be based in either New York, N.Y. or at the same street address in Los Angeles, California, are Cryptostockoptionstrade Ltd, Global Smart Option Broker Ltd, Hypertradingoption Ltd, Stockbrokertechniques Ltd., and SprintTrade. Each complaint seeks an order directing the respondent to cease and desist from committing violations of the Commodity Exchange Act (CEA) and CFTC regulations.
/jlne.ws/3UuyNpE
CFTC Staff Issues No-Action Letter to Taiwan Futures Exchange
TAIFEX
On 15th September 2022, the Commodity Futures Trading Commission (CFTC) issued No-Action Relief to Taiwan Futures Exchange (TAIFEX) for its swaps central clearing services. The relief allows TAIFEX to clear swaps for the proprietary trades of its clearing members that are U.S. persons or affiliates of U.S. persons without registering as a derivatives clearing organization (DCO) as required by the Commodity Exchange Act (CEA). TAIFEX has to report to a Swap Data Repository (SDR) data regarding the two swaps resulting from the novation of the original swap that had been submitted to TAIFEX for clearing. TAIFEX must also report the termination of the swap accepted for clearing by TAIFEX to the SDR to which the swap was originally reported. The No-Action Relief shall expire at 15th September 2023. If TAIFEX has not obtained the exemption from registration as a DCO before the expiration date, it will apply to the CFTC for an extension of the No-Action Relief to continue providing U.S. financial institutions with OTC derivatives central clearing services.
/jlne.ws/3LAWgkQ
US SEC Ramps Up Scrutiny of Private Equity Firms' Writedowns
Dawn Lim - Bloomberg
Buyout firms have been forced to erase billions of dollars from the value of their wagers in the economic downturn, and financial regulators are now scrutinizing whether managers are reducing fees for investors when those deals sour.
The Securities and Exchange Commission has been ramping up inquiries to private equity firms about whether they adjust customer fees when bets get written off to zero or below their original price tags, people with knowledge of the matter said.
/jlne.ws/3r4hiiA
| | | | | | Strategy | | | Wall Street's Top Banks Are Backing Oil to Stage a Recovery
Yongchang Chin - Bloomberg
Oil is set to rebound in the fourth quarter, according to some of Wall Street's leading banks, as low inventories and sustained demand underpin a recovery despite growing concerns of a global slowdown.
JPMorgan Chase & Co. forecasts London's Brent oil at $101 a barrel for the final three months of 2022, while Goldman Sachs Group Inc. sees $125 and Morgan Stanley targets $95. The global crude benchmark was last near $90.
/jlne.ws/3Uxt2Yd
Bearish On The Market? Here's How To Make Money Using Options
Steven Bell - Investor's Business Daily
There are a lot of reasons to be negative about the stock market. At the forefront is a hawkish Federal Reserve that appears to be steadfast in its drive to bring down inflation to its 2% target at all costs.
With the S&P 500 in bear-market territory, investors who believe the market will be lower by the end of the year can take advantage using a bear put spread on the SPDR S&P 500 ETF (SPY).
/jlne.ws/3BAfXVs
Investor hedging dampens VIX's fear factor
Christopher Whittall - IFR
The S&P 500 recorded its worst session of a terrible year when it slid over 4% on September 13. One closely watched barometer of stock market health told a different story that day, though, as Cboe's Volatility Index - the VIX - only inched up a few points.
The mild reaction from a benchmark often referred to as Wall Street's fear gauge confirmed a trend that has confounded investors this year: equity volatility remains subdued even as stocks record their worst performance since the 2008 financial crisis.
/jlne.ws/3r0ssET
| | | | | | Miscellaneous | | | CEOs Can't Fix Our Biggest Problem with Return to Office: Awful Commutes
Sarah Green Carmichael - Bloomberg
Whether pressured to return or wooed with free breakfast, many workers are filing back into downtown offices. But few are going in five days a week, and many don't plan to for the foreseeable future. That's because employers can do little about the primary pain point that's keeping people at home: commuting.
/jlne.ws/3r3PY3U
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| | | Jeff Bergstrom
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