| September 05, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | US Stock Investors' Complacency is Worrying, JPMorgan Strategists Warn; Strategists warn of optimism as September is typically weak; US stock valuations are 'stretched' versus rising real yields
Farah Elbahrawy - Bloomberg
US stock investors have gotten so confident that it's concerning strategists at JPMorgan Chase & Co. "There is complacency in sentiment evident, VIX is near record low and positioning has increased" to above-average levels, a team led by Mislav Matejka wrote in a note. "There is no more safety net" and FOMO - the fear of missing out - is in full swing.
/jlne.ws/3Eo1FJk
Secretive active ETFs lose out to their fully transparent rivals
Steve Johnson - Financial Times
Secretive exchange traded funds that hide what they are holding from potential investors appear to be falling out of favour.
US regulators approved semi- and non-transparent ETFs in 2019, paving the way for the structure to depart from the tried-and-trusted model where ETFs reveal their full portfolio publicly every day.
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Trafigura Says 'Fragile' Oil Market May Be Prone to Price Spikes; Luckock says one reason is underinvestment in crude production; Oil options traders boost wagers on $100 oil on tighter market
Serene Cheong and Sharon Cho - Bloomberg
Major commodities trader Trafigura Group says oil prices could spike as higher interest rates and underinvestment squeeze the market.
The consensus view is for prices to remain near current levels, but the market is "more fragile than it looks," Ben Luckock, the co-head of oil trading said in an interview at APPEC in Singapore. Brent crude is nearing $90 a barrel after OPEC+ heavyweights reduced supply â curbs that could continue further.
/jlne.ws/3EohpMz
Labor Is a Terrible Guide to Inflation, but Nobody Wants to Admit It
Jon Sindreu - WSJ
In a world of volatile commodity prices, clogged supply chains and government stimulus checks, the tightness of the labor market seems to be the only guide central banks really trust in their push to steer inflation below 2%. Unfortunately, it is a compass that rarely points north.
Since U.S. data for August showed a cool-down in hiring and wages and an increase in unemployment, financial markets have all but excluded the possibility that the Federal Reserve will keep raising interest rates. Combine this with a big fall in inflation this year, and it might look like a rehabilitation of the traditional economic theory that links a looser labor market to weaker pay demands, and hence to slower price growth.
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Hedge funds buy US crude as stocks fall
John Kemp - Reuters
Portfolio investors have become less bearish about the outlook for U.S. crude oil prices as inventories fall, but the rest of the petroleum complex continued to see light selling at the end of the seasonal holiday slowdown. Hedge funds and other money managers purchased the equivalent of 19 million barrels in the NYMEX and ICE U.S. crude (WTI) futures and options contracts over the seven days ending on August 29.
/jlne.ws/3r39fpM
Farmer sentiment dips amid weaker view of current conditions
CME Group
Producer sentiment was notably lower in August, as the Purdue University/CME Group Ag Economy Barometer index dipped 8 points to a reading of 115. This month's decline was fueled by producers' weaker perception of current conditions both on their farms and in U.S. agriculture. The Current Conditions Index fell 13 points to a reading of 108. The Future Expectations Index also declined, down 5 points in August to a reading of 119. This month's Ag Economy Barometer survey was conducted from August 14-18, 2023.
/jlne.ws/3EqzHMX
| | | | | | Exchanges | | | OCC Reports August 2023 Monthly Volume Data
OCC
OCC, the world's largest equity derivatives clearing organization, announced today that year-to-date average daily volume through August 2023 was 44.6 million contracts. Total monthly volume for August 2023 was 1 billion contracts.
/jlne.ws/47ZJB5V
Financial exchanges still split on crypto - industry survey
Elizabeth Howcroft - Reuters
Regulated financial exchanges are talking about how to capitalise on interest in crypto, an industry group said on Tuesday, but a third of respondents to its latest survey said they had no plans to offer the asset class. Exchanges said they were concerned about a lack of uniform regulatory standards, market volatility and the potential for cybersecurity risks relating to crypto assets, a report from the London-based World Federation of Exchanges (WFE) said.
/jlne.ws/483xEfC
CME Group to Launch Treasury Bill Futures
Eric Wallerstein - WSJ
Surging Treasury bill issuance is spurring CME Group, one of the world's largest derivatives exchanges, to launch futures tied to 13-week T-bills on Oct. 2.
The firm said Tuesday that trading is pending regulatory review. The contracts are meant to help investors hedge new debt sales by the U.S. government, which is financing a fiscal deficit and refilling its coffers following the debt-ceiling standoff. T-bill yields are currently trading around 5.45%.
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CME Group Reports Second-Highest August ADV on Record
CME Group
Double-digit growth in Interest Rate, Energy, Agricultural, Metals and options products; Highest-volume August for Equity Index futures and options and Agricultural options products
Amid ongoing geopolitical, economic and weather-related uncertainties, CME Group, the world's leading derivatives marketplace, today reported its August 2023 market statistics, including average daily volume (ADV) of 24.2 million contracts, an increase of 14% from 2022 and the second-highest ADV for the month of August on record.
/bit.ly/44FX53Y
Deribit Sees 17% Growth in Crypto Derivatives Trading Volume in August, Led by Options
Omkar Godbole - CoinDesk
Trading volume across crypto derivatives listed on the Panama-based Deribit exchange remained brisk last month even as the global activity cooled. Deribit's derivatives market volume rose to $42 billion in August, a 17% increase versus July, bucking the global downtrend that saw worldwide derivatives volumes decline 12.1% to around $1.6 trillion, the exchange said in the monthly review shared with CoinDesk. Volume figures represent total activity in options, futures and perpetual futures segments.
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August 2023 figures at Eurex
Eurex
Total Eurex volume up 8 percent y-o-y in August; Strong rise in Repo volumes to EUR 358 billion; Strongest growth again in GC Pooling at plus 243 percent y-o-y; Notional outstanding in OTC Clearing up 14 percent. Eurex, Europe's leading derivatives exchange, reports an 8 percent increase in total trading volume to 133.4 million contracts in August from 123.6 million contracts in the same month last year. Interest rate derivatives increased by 11 percent year-on-year in August from 49.5 million to 54.9 million traded contracts. Equity derivatives also increased by 11 percent, from 15.3 to 17 million contracts traded in August while index derivatives saw a 5 percent rise, from 58.7 million to 61.4 million contracts traded.
/bit.ly/3Z12Nw9
| | | | | | Regulation & Enforcement | | | SEC issues ruling for a new National Market System; The regulator has ordered FINRA and SROs associated with Cboe, Nasdaq, and NYSE to work jointly in creating a new plan.
Claudia Preece - The Trade
The SEC has ordered the filing of a new national market system plan (NMS plan), specifically directing FINRA and 18 SROs associated with Cboe, Nasdaq, and NYSE to act jointly in developing the NMS plan. The results are set to be published for public comment, and according to the SEC, the revised plan must: include a date by which it will become fully effective, alongside a prescribed timeline and periodic progress reports; require that all those involved be subject to the plan's conflicts-of-interest and confidentiality policies; include specialised provisions regarding the sharing of protected information; and outline rules regarding the use of subcommittees.
/jlne.ws/3sDWToC
Commentary - Three FERC manipulation fact patterns energy traders should watch
David Applebaum, partner at Jones Day - FIA
The US Federal Energy Regulatory Commission and the Commodity Futures Trading Commission oversee trading in US energy and commodity markets. MarketVoice recently published an article on CFTC enforcement trends in commodity markets in anticipation of FIA's Commodities Forum in Houston, September 13-14, where those trends will be covered in depth. Today, we turn to FERC, which has jurisdiction over physical power and gas markets.
David Applebaum, a partner at the law firm of Jones Day and the former director of the Division of Investigations at FERC, will be moderating a panel at the Commodities Forum dedicated to FERC enforcement and regulatory initiatives. MarketVoice asked David to distill some of the FERC enforcement trends that should be top-of-mind for traders and compliance departments. Click here for more information on the Forum or to register.
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Private funds sue to stop 'unlawful' SEC disclosure rules
Brooke Masters and Mark Vandevelde - Financial Times
A coalition of private equity, venture capital and hedge fund groups have sued to block sweeping new US regulations they claim would fundamentally and illegally change the $27tn industry. Six industry groups told a Texas-based federal appeals court that the Securities and Exchange Commission overstepped last week when it adopted new rules for private fund managers.
/jlne.ws/3EuUSxm
Hedge Funds, Private Equity Sue SEC Over Fee Disclosure Rule; Trade groups argue that regulator overstepped its authority; Case may have implications for jurisdiction over private funds
Dawn Lim - Bloomberg
Trade groups for the world's biggest hedge funds and private equity firms are taking the US Securities and Exchange to court over new restrictions it placed on the industry last month. The American Investment Council and the Managed Funds Association are among the groups alleging the SEC went too far by rolling out sweeping rules mandating disclosures and barring firms from doing sweetheart deals with some investors.
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| | | | | | Strategy | | | Funds buy CBOT corn and soybeans amid poor finish to US crop
Karen Braun - Reuters
The second half of August was exceptionally dry in the U.S. Corn Belt, likely trimming yields for corn and especially soybeans due to their reliance on late-season moisture. Speculators responded by boosting their bullish Chicago soybean bets, which they have held for more than three years, and easing bearishness in corn futures. In the week ended Aug. 29, money managers cut their net short position in CBOT corn futures and options to 87,348 contracts from 106,135 in the week before, which had been their most bearish corn view since early May.
/jlne.ws/45FPnYH
Slow September
Cboe (Video)
In #Vol411, Tim Biggam @Delta_Desk shares that September has been the second worst-performing month for #stocks over the past 15 years, the 10-year yield is back above 4%, earnings season is mostly finished and more.
/jlne.ws/3LcZdJp
| | | | | | Miscellaneous | | | Meme Stocks: The GameStop Short Squeeze Is Now a Movie
John Authers - Bloomberg
Dumb Money looks set to be one of the cinematic events of the fall. Less than three years after the extraordinary short squeeze on GameStop Corp. introduced everyone to the concept of the meme stock, and showed the potential for organized retail investors to shake the market, those amazing events are to become a movie.
/jlne.ws/3Rfp4EF
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