| May 22, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | John Lothian, Founder & Publisher of John Lothian News
David Greely - Smarter Markets
In the second installment of our Days of Futures Past series, we welcome John Lothian into the SmarterMarkets studio. John is Executive Chairman at John J. Lothian & Company and Founder & Publisher of John Lothian News. SmarterMarkets host David Greely sits down with John to discuss the people and times that created the modern futures exchange in Chicago.
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****** This was a harder interview to do than when Lamont Black at DePaul asked me to give the history of Chicago derivatives trading in three minutes to a group of students. Here I had to remember a lot more history. I start with the history of the Cashman family and how they came to the CBOT, as many immigrants had the opportunity to do after World War II.~JJL
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Miami International Holdings, Inc. has completed the acquisition of LedgerX from FTX debtors, MIAX said in a press release. MIH owned three equity options exchanges (MIAX, MIAX Pearl & MIAX Emerald), a stock exchange (The Bermuda Stock Exchange), a designated contract market (Minneapolis Grain Exchange) and a futures commission merchant (Dorman Trading LLC). Now it also owns another regulated exchange and clearinghouse that are registered as a Designated Contract Market (DCM), Derivatives Clearing Organization (DCO) with the CFTC, plus it is also registered as a Swap Execution Facility (SEF) with the commission. I think MIAX just needs an Introducing Broker and a Broker Dealer for the royal flush. ~JJL
| | | | | | Lead Stories | | | US Debt Deal Is Still Elusive With Traders Bracing for Volatility
Ruth Carson and Matthew Burgess - Bloomberg
Investors are girding for spikes in currency volatility and losses in equities as the US struggles to clinch a debt-limit deal.
The dollar edged lower against most major peers in Asia trading Monday as traders evaluated the latest developments. President Joe Biden said a call with House Speaker Kevin McCarthy "went well," and the two are set to meet on Monday afternoon.
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The Debt-Ceiling Fight Bores the Stock Market. That Could Change Fast.
Teresa Rivas - Barron's
As the U.S. hurtles closer to the early June deadline to resolve the debt-ceiling crisis, the stock market has been relatively sanguine about dancing so close to the cliff's edge.
Yet, even an expected 11th-hour resolution could still cause problems for investors.
The fallout from default would no doubt be wide and disastrous, from a plunge in the stock marketâand retirement account valuesâto the halt of Social Security and other government benefits that millions of Americans depend on. And then add the long-term repercussions of irreparable damage to global faith in the U.S. economic system.
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Debt-Ceiling Deadline Tracker: The Growing Fear Premium in Treasury Bill Markets
Alex Harris - Bloomberg
Investors have jacked up sharply the premium they demand to hold US paper that's most at risk of default if Congress and the White House fail to strike a deal on the debt ceiling.
While broader financial markets remained relatively sanguine still about the prospect of a resolution eventually being found, the yields on securities maturing in early June have leaped once more. The rates on June 6 bills jumped more than 40 basis points on the day to around 5.82% and June 1 instruments were up by around 30 basis points at 5.72%, showing that investors are shunning instruments that would be among the first to default if the administration were to exhaust its borrowing headroom early in the window that Treasury Secretary Janet Yellen has warned about.
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Rare Shift in Crypto Volatility Offers Ether (ETH) a Boost Versus Bitcoin (BTC)
Suvashree Ghosh and Sidhartha Shukla - Bloomberg
Volatility gauges suggest traders expect smaller near-term swings in Ether compared with Bitcoin, a reversal of the usual pattern for the two largest digital assets in the cryptocurrency sector.
The T3 Ether Volatility Index, a measure of implied 30-day swings in the token, trails a similar gauge for Bitcoin by around the most since at least 2021. Typically the Ether index tops the one for Bitcoin.
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How Wall Street is preparing for possible US debt default
Davide Barbuscia and Pete Schroeder - Reuters
As talks over raising the U.S. government's $31.4 trillion debt ceiling go down to the wire, Wall Street banks and asset managers have been preparing for the fallout from a potential default.
The financial industry has prepared for such a crisis before, most recently in September 2021. But this time, the relatively short time frame for reaching a compromise has bankers on edge, said one senior industry official.
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The Game Theory of the Debt Limit Points Toward Settlement
Larry Hatheway - Barron's
In the movie Don't Look Up, scientists played by Jennifer Lawrence and Leonardo DiCaprio try to warn the U.S. government to take action before a giant comet collides with the Earth, destroying all life on the planet. Unfortunately, political dysfunction leads to false starts, threats, delays, and crossed agendas. In the ends, Earth is obliterated because politicians, the media, and the market don't seem to think it could all really go so wrong.
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Hot Credit Suisse CDS Trade Risks Being Wrecked by Hedge Funds
Laura Benitez - Bloomberg
Hedge funds looking to trigger payouts on derivatives tied to Credit Suisse Group AG are clashing with investors that piled into a different hot trade. The hedge funds have piled into a longshot wager that a derivatives industry panel will determine that the shotgun takeover of Credit Suisse by rival UBS Group AG was effectively the equivalent of a default event.
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Funds may be bearish CBOT soybeans for first time since April 2020
Karen Braun - Reuters
Speculators have been heavier sellers of Chicago-traded soybeans in recent weeks, and although they retained bullish bets through last Tuesday, late-week liquidation could have funds short in real time.
In the week ended May 16, money managers slashed their net long position in CBOT soybean futures and options to 23,942 contracts from 48,459 a week earlier, establishing their least bullish stance since November 2021.
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| | | | | | Exchanges | | | MIAX Exchange Group - Holiday Schedule
Press Release
Please be advised that the MIAX Options Exchange, MIAX Pearl Options Exchange, MIAX Emerald Options Exchange and MIAX Pearl Equities Exchange will be closed on Monday, May 29, 2023 in observance of Memorial Day.
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| | | | | | Technology | | | Nasdaq's Chai Discusses The Tech That Manages Risk And Volatility
Sean McMahon - SmartBrief
The digital transformation of financial markets has spawned incredible connectivity and efficiency, but it has also created plenty of challenges. Roland Chai, executive vice president for market technology at Nasdaq, joins the show to outline how new technologies are enhancing market resiliency - even in the face of extreme volatility events like interest rate moves, wars, bank failures, the GameStop frenzy and the pandemic.
/jlne.ws/45jwZVV
| | | | | | Strategy | | | Traders Are Betting a Stock-Market Crash Is More Likely
Eric Wallerstein - WSJ
Traders are increasingly looking to hedge against a catastrophic event.
Options contracts that would pay out in the event of an extreme stock-market downturn are getting pricier.
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Investors Turn to Volatility Bets to Hedge Debt-Ceiling Risk
Eric Wallerstein - WSJ
Traders are scooping up bets that would likely pay off in the event of a severe stock-market downturn following a potential debt-ceiling fiasco.
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Investors Seek Protection in Case of Debt-Ceiling Debacle; Many are pulling cash from stock funds and seeking safety in Treasurys that don't mature for several years
Eric Wallerstein - The Wall Street Journal
Some investors are betting the debt-ceiling stalemate could inject a new dose of volatility into markets. As the U.S. government lurches closer to possibly missing debt payments-which Treasury Secretary Janet Yellen said this past week would "crack open the foundations upon which our financial system is built"-the S&P 500 is up 9.2% this year at its highest levels since August, and stock-market volatility has subsided to lows not seen since 2021.
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Hedge Funds Rush to Buy Stocks With S&P 500 Nearing Key Level
Lu Wang and Elena Popina - Bloomberg
Some previously steadfast bears are showing signs of giving in after a seven-month advance put the S&P 500 on the edge of a key chart line.
Hedge funds that make both bullish and bearish equity wagers have snapped up US shares for two straight weeks, with total purchases reaching the fastest pace since October, data compiled by Goldman Sachs Group Inc.'s prime brokerage unit show. The binge followed persistent selling in the previous five weeks.
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Data Ahead This Week
Cboe (Video)
In #Vol411, Joel Hawthorne @louiswinthrop covers Friday's #optionstrading, today's most active $SPX & $VIX options contracts and #earnings to look out for this week.
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| | | | | | Miscellaneous | | | If you invested $1,000 in this one stock just 10 years ago, you'd be $575,000 richer. Can you guess what it is? The answer might surprise you.
Andrew Shilling - MarketWatch
The odds are stacked against even the slightest long-term gain from a single stock. "Investing in a single stock exposes the shareholder to significant volatility and the chance for either ruin or reward," explains Nathan Wallace, principal wealth manager at Savvy Wealth. Over the past decade, just 42% of all individual equities managed to finish in the black, according to Morningstar data. That's why most financial planners say diversification is critical for long-term investment protection and a more predictable rate of return. (Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.)
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
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Editor-in-Chief
| | | Jeff Bergstrom
Editor
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