| February 23, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Joseph J. Ritchie, founder of proprietary trading firm Chicago Board Crushers, which later changed its name to a more memorable Chicago Research and Trading and was known widely as CRT, died Monday at the age of 75. The name of the firm was changed, Ritchie said, because people would call up and say they wanted their boards crushed.
Ritchie was a legendary trader who took his computer programming skills and programmed a Texas Instrument calculator with the Black Scholes options formula. However, he only stayed at the CBOE for two months working on the floor there and gave his calculator to Blair Hull. Hull used it very well, the story goes. Ritchie went to the CBOT to trade the silver arbitrage, then later moved over to the soybean crush.
And just to show you how antiquated our markets were, and how innovative guys like Ritchie were, let me share this story. Ritchie rigged up a slide rule for trading the soybean crush with values for beans, meal and oil on them to be able to quickly calculate the value of the crush. No other traders had such a tool and this allowed him and his clerks to be faster than other traders.
He would later go on to be a leader in computer driven trading strategies, using futures and options prices in real time to evaluate opportunities. Meanwhile, competing traders were getting paper sheets of option prices updated a couple times a day. He would go on to found CRT with $100K in 1977 and in the 1980s it was 30% to 40% of the U.S. equity market volume. He sold the firm to NationsBank in 1993 for $225 million.
At the time of NationsBank buying CRT in 1993, Pat Arbor was the Chairman of the CBOT, Bill Brodsky was the CEO of the CME, the late Jack Sandner was the Chairman of the CME and that same day Sandner had just unveiled his grand plan for overhauling the way the U.S. markets are regulated. ~JJL
| | | | | | Lead Stories | | | Russian Markets Reeling, With Ruble Record Low in Sights
Netty Idayu Ismail, Tugce Ozsoy, and Selcuk Gokoluk - Bloomberg
Currency's weakness is 'here to stay,' says TD Securities; Options show a 50% chance of the ruble falling to a record low
Russian markets have taken historic losses this year and the message coming from traders is that more declines may be ahead for the ruble. Options pricing suggests there's a 50% chance the ruble will sink to a record low against the dollar within the next two months -- dipping below levels from 2016 when the economy was mired in a recession. Technical analysts are also eying the same move, with a trendline of the currency pair on the verge of giving way.
/jlne.ws/36AQS0Q
Ukraine Crisis May Uncover Stealth Central Bank Put
Robert Burgess - Bloomberg
The central bank put is dead. Long live the central bank put! In the recent past, investors could rely on policy makers to bail out markets and economies at the first sign of trouble by lowering interest rates and pumping money directly into the financial system. Although such a reaction function on the part of central banks has probably become impossible with inflation surging globally, it doesn't necessarily mean investors will be hung out to dry if the crisis in Ukraine intensifies.
/jlne.ws/3JLme36
Wall Street stocks waver as traders weigh likely impact of sanctions on Russia
Nicholas Megaw, Naomi Rovnick and Hudson Lockett - Financial Times
US stocks veered between losses and gains in volatile trading on Wednesday as geopolitical tensions escalated with the imposition of EU sanctions on senior Russian figures and a fresh wave of cyber attacks on Ukrainian government websites and banks.
Wall Street's benchmark S&P 500 index fluctuated, reversing early gains to turn negative before rising 0.1 per cent by midday in New York, while the tech-heavy Nasdaq Composite fell 0.1 per cent.
/jlne.ws/3HgxW3U
Traders see inflation as 2022's biggest market mover - survey
Lucy Raitano - Reuters
Inflation will have the biggest impact on global markets in 2022, traders said, while liquidity was the top daily trading challenge for a sixth year, according to an annual survey of institutional trading clients by JPMorgan published on Wednesday.
About 48% of 718 institutional trading clients surveyed at the end of November 2021 highlighted inflation as this year's biggest market mover, displacing the global pandemic, which topped last year's list.
/jlne.ws/35lp0gu
U.S. Stocks Continue Slide Over Ukraine Concerns
Joe Wallace and Karen Langley - WSJ
U.S. stocks fell Wednesday, adding to their losses after concerns over the Ukraine crisis helped push the S&P 500 into correction territory.
The U.S. stock benchmark declined 0.9%, a day after closing down more than 10% from its Jan. 3 record following Russia's deployment of soldiers in Ukraine's Donbas region.
The Dow Jones Industrial Average fell 0.7%, or about 220 points, and the technology-heavy Nasdaq Composite retreated 1.3%.
/jlne.ws/33JbUcr
Fear of a Russia-Ukraine War Lifts Volatility ETFs
Nasdaq
The CBOE Volatility Index and VIX-related exchange traded funds advanced Tuesday after Moscow authorized the use of force outside of Russia and troops entered the Donetsk and Luhansk regions of Ukraine, fueling fears of an imminent all-out war.
On Tuesday, the iPath Series B S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) increased 1.9%, and the ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) advanced 1.7%. Meanwhile, the CBOE Volatility Index jumped 9.7% to 30.5.
/jlne.ws/3tlTxmX
| | | | | | Exchanges | | | NYSE Owner Gets on Board With Crypto-Powered Revamp of Trading
Katherine Doherty and Yueqi Yang - Bloomberg
TZero's mission to remake U.S. stock trading into a blockchain-powered business just got a prominent new ally: the owner of the New York Stock Exchange.
Intercontinental Exchange Inc., NYSE's parent, has purchased a stake in tZero, according to a Tuesday statement. ICE Chief Strategy Officer David Goone will become tZero's new chief executive officer next month.
/jlne.ws/3t2seO9
When Volatility Calls, NYSE DMMs Answer
Steven Poser, Director - NYSE Research
Our recent article, "NYSE DMMs: Meeting the Volatility Challenge" highlighted our performance when liquidity spiked on January 24, 2022. We showed that NYSE-listed companies had tighter quoted spreads compared to Nasdaq-listed companies and achieved 2 times better accuracy on the opening auction and 3 times better accuracy on the closing auction1. In this article, we take a deeper dive into NYSE listed-company performance when volatility is high, with a special focus on the Designated Market Maker (DMM).
/jlne.ws/33Kbq5T
| | | | | | Strategy | | | Stock Market Outlook: Correction Doesn't Validate End-of-Cycle Worries
Matthew Fox - Business Insider
The S&P 500 entered correction territory on Tuesday after it fell more than 10% from its record high, but that doesn't mean the
bull market
in stocks is over, according to JPMorgan's Marko Kolanovic.
Rising geopolitical tensions between Russia and Ukraine, combined with a Federal Reserve that is expected to begin raising interest rates next month, has led to a risk-off period for the stock market so far this year.
/jlne.ws/3h7fQHf
| | | | | | Miscellaneous | | | Sanctions Threaten U.K.'s Position as Playground for Russian Oligarchs
Max Colchester and Alistair MacDonald - WSJ
The U.K. is threatening to ratchet up pressure on the Kremlin thousands of miles away in the rich enclaves of London.
For decades, Russia's ultrarich have flocked to the city once dubbed Moscow-on-Thames, snapping up high-end houses, sending children to elite private schools and leveraging the capital's status as a global financial hub.
/jlne.ws/3hefazP
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