| May 02, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Short Sellers Tightened Grip on Regional Banks in Runup to Rout
Vildana Hajric - Bloomberg
Bearish bets on regional banks jumped appreciably in the last week and hedge fund shorts were part of the initial surge in selling as the group's shares dropped Tuesday morning.
Short interest as a percentage of shares outstanding in the SPDR S&P Regional Banking ETF (ticker KRE) rose to 96% from 74% a week ago, according to data compiled by S3 Partners. When accounting for the synthetic long bets created in each short sale, it means almost 50% of positions in the ETF are wagering on a decline. That number climbed from 42% last Tuesday.
/jlne.ws/42eSBQU
Dollar Gloom Scenario Faces Test With Market Risks Mounting
Anya Andrianova and George Lei - Bloomberg
Wall Street's bearish stance toward the dollar, about as pronounced as it's been since early 2022, is on the cusp of a serious test.
Markets are entering a stretch that's full of risk, with pivotal central bank meetings looming and the clock ticking on the all-important US debt-ceiling standoff. It all comes against a backdrop of worries about a potential US recession â or even a stagflation scenario â after the Federal Reserve ratcheted up borrowing costs to tame inflation.
/jlne.ws/3nrmleD
First Republic rescue fails to arrest slide in US regional bank shares
Brooke Masters, Harriet Clarfelt, Nicholas Megaw and Stephen Gandel - Financial Times
The rescue of First Republic this week has failed to arrest a sell-off in regional bank shares, which plunged on Tuesday afternoon as investors digested JPMorgan's takeover of the troubled Californian lender.
Trading in PacWest, seen as one of the weakest of the midsized regional banks, was briefly halted for volatility and was down 28 per cent by late-afternoon in New York. The fall put PacWest on course for its worst daily decline since March 10, when Silicon Valley Bank's collapse heaped pressure on the entire sector. Western Alliance was down more than 15 per cent.
/jlne.ws/3p5baZq
Why it might take 'a stock-market meltdown' to resolve the debt-ceiling standoff
William Watts - MarketWatch
It might take a market mishap to end a debt-ceiling standoff that threatens to trigger a previously unthinkable default on U.S. government debt.
"An interesting question now is whether financial market vigilantes, in bonds, stocks or even currencies could flex their muscles the closer the government gets to running out of cash," said Steven Barrow, head of G-10 strategy at Standard Bank, in a note late last week.
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Volatility Lulls Tend to Lag, Not Lead, Stock Surges
Eric Wallerstein - WSJ
The current stock-market calm may be less boon and more bust for investors in the coming months.
/jlne.ws/3ALpF7q
Companies Turn to Derivatives to Lock In Funding Costs Amid Rate Uncertainty
Nina Trentmann - Bloomberg
US companies are turning to derivatives to lock in future borrowing costs, as corporate finance chiefs worry that financing will grow more expensive amid stubborn inflation, even if markets are bracing for rate cuts in 2023.
The Fed has hiked short-term rates over the past year at the fastest pace in decades, and is widely expect to boost them again by a quarter-point on Wednesday. What happens after that is unclear: markets are betting that the central bank will pause, and start trimming rates later this year. But many company executives don't foresee monetary easing by the end of December.
/jlne.ws/3p3BWBH
Investors Are Piling Into Actively Managed ETFs
Jack Pitcher - WSJ
Investors are pouring money into actively managed exchange-traded funds, underscoring the appeal of active strategies after years of calls for passive index investing to take over. Active funds still make up a sliver of the roughly $7 trillion ETF marketâless than 6% of total assetsâbut have attracted about 30% of the total flows to ETFs so far this year, according to Bloomberg Intelligence. That follows a banner year for active ETFs in 2022, when they gathered roughly 14% of total flows.
/jlne.ws/3nm68r0
| | | | | | Exchanges | | | OCC Highlights DEI Effort in the 2022 Annual Report
OCC
Diversity, Equity, and Inclusion are core values at OCC. This year our annual report features a dedicated DEI section that highlights the progress we've made in creating an inclusive and representative workplace. Watch this video, where our Management Committee, DEI leaders, and colleagues in our Employee Network Groups talk about our strategies to foster a culture of belonging. Talent, community, development, and culture are the four focused topics to ensure continued growth. Learn more in our 2022 Annual Report.
/jlne.ws/42jUtaX
CME Group Reports April 2023 Monthly Market Statistics
CME Group
Second-highest April ADV on record; SOFR futures and options continue ADV growth; Strong ADV increases in options, commodities and cryptocurrencies. CME Group, the world's leading derivatives marketplace, today reported its April 2023 market statistics, reaching an average daily volume (ADV) of 19.8 million contracts during the month, the second-highest April ADV in company history. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/40YcnPI
Coinbase launches offshore crypto exchange among ongoing regulatory woes in the U.S.
Anushree Dave - MarketWatch
On Tuesday, Coinbase COIN, +2.35%, the largest crypto exchange in the U.S., announced the launch of a new product for crypto investors outside of the country. The newly-formed international exchange will let institutional investors based in eligible jurisdictions trade perpetual futures, according to a statement from Coinbase.
A perpetual future is a type of derivative financial contract without a settlement time or expiration date, and according to Coinbase, perpetual futures trading accounted for around 75% of global crypto exchange volume last year.
/jlne.ws/3nm6kXg
Farmer sentiment improves; less pessimism over interest rates
CME Group
Farmer sentiment improved modestly in April as the Purdue University/CME Group Ag Economy Barometer rose 6 points to a reading of 123. Both of the barometer's sub-indices were also higher in April, the Current Conditions Index was up 3 points to 129 and the Future Expectations Index was up 7 points to 120. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers' responses to a telephone survey. This month's survey was conducted between April 10-14.
/jlne.ws/3AKhloy
| | | | | | Strategy | | | Pullback In The Market
Cboe (Video)
Tim Biggam @Delta_Desk updates us on $VIX index, #options, #futures, and takes a look at #Fed and #earnings. #Vol411
/jlne.ws/3nlOIuD
| | | | | | Miscellaneous | | | Mohamed El-Erian: 4 Unintended Consequences of the First Republic Deal
Zinya Salfiti - Markets Insider
Top economist Mohamed El-Erian warned of further "potential collateral damages" from the failure of First Republic Bank and its subsequent takeover by JPMorgan.
The Wall Street giant agreed on Monday to acquire First Republic, which was shut down by after facing a spiraling deposit run in recent weeks, paying $10.6 billion to the Federal Deposit Insurance Corp. (FDIC) in a deal arranged by regulators.
/jlne.ws/3AOa0UY
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