Exchange leaders at IDX stress importance of price discovery
Jeff Reeves – MarketVoice
As the derivatives industry gathered at FIA’s IDX 2019 conference in London, familiar issues like Brexit remained the regular topics of conversation.
But perhaps more important was a broader and more philosophical discussion at IDX among the world’s leading derivatives exchanges concerning the fundamental purpose of derivatives markets in modern global economy.
Risk-On Is Back as Rally-Hungry Bulls Set Aside Trade Fears
Luke Kawa – Bloomberg
The fiercest rally in U.S. stocks and corporate bonds since January showed bullish traders are ready to run wild.
By some measures, Tuesday was the most risk-on day this year following a painful month of losses spurred by U.S. trade aggression and concern the Federal Reserve wasn’t willing to support the economy. The optimistic wagers could be seen across asset classes, becoming the dominate force in everything from tech stocks to junk bonds to volatility markets.
ETF ‘Heartbeats’ Show Influence of Indexes
Asjylyn Loder – WSJ
A popular BlackRock Inc. exchange-traded fund that tracks companies with healthy balance sheets shed $1.5 billion on a single day last week, the largest outflow in its six-year history.
The $10.5 billion iShares Edge MSCI USA Quality Factor ETF invests in companies that have stable earnings and lower debt levels. It wasn’t that investors suddenly became disillusioned by such companies. Rather, the outflows were just one leg of a $3 billion two-way trade that began days earlier, and had little to do with market sentiment.
`Do They Have Enough Ammo?’: Markets Mull Potency of Powell Put
Adam Haigh, Lu Wang and Eric Lam – Bloomberg
As far as the risk-on crowd is concerned, Jerome Powell’s put is in play. The question in markets deluged by trade war tweets and economic gloom is how quickly it will be exhausted.
Stocks rallied the most since January in reaction to the Federal Reserve chairman’s three-sentence reference to monitoring risks and being prepared to act. But long-term Treasury yields still reflect deep pessimism about growth, with 10-year yields at just 2.09% — below the Fed’s policy rate.
Liquidity Breakdown Is Biggest Concern in JPMorgan Quant Survey
Joanna Ossinger – Bloomberg
The greatest risk to quantitative strategies wouldn’t be an equity-bear market or a sharp increase in rates. It would be a collapse in liquidity.
That’s the result from a survey of investors at JPMorgan Chase & Co.’s U.S. Macro Quantitative and Derivatives Conference in New York on May 17, with 36% of respondents picking a liquidity plunge and 25% fearing political or geopolitical risks most, according to the conference summary from strategists Marko Kolanovic and Dubravko Lakos-Bujas.
Exchanges and Clearing
Cboe Global Markets Reports May 2019 Trading Volume
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today reported May monthly trading volume.
Intercontinental Exchange Reports May Statistics
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported May trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at http://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
Miami International Holdings Reports May 2019 Trading Results for MIAX Exchange Group
Miami International Holdings, Inc. (MIH) today reported the May 2019 trading activity for its three fully electronic options exchanges – MIAX, MIAX PEARL and MIAX Emerald (together, the MIAX Exchange Group). The MIAX Exchange Group collectively executed over 38 million equity option contracts in May for a combined average daily volume (ADV) of 1,727,481 contracts, representing a total U.S. equity options market share of 9.36%.
Regulation & Enforcement
SEC moving closer to requirement for brokers to reveal advice conflicts
Federal regulators are moving to require that brokers provide their customers with detailed disclosures of their potential conflicts of interest when dispensing advice for retirement planning and other investments.
But critics say the Securities and Exchange Commission’s new measure, supported by the financial industry, doesn’t go far enough to protect retail investors against abuses. They say a stricter standard advanced under the Obama administration should apply to brokers.
London must not become offshore center post Brexit: CFTC chair
Huw Jones – Reuters
Policymakers should “tether” London to the European Union to avoid isolating the region’s largest financial hub, harming the euro zone economy and spawning an offshore financial center, the head of the U.S. derivatives watchdog said.
EU’s markets watchdog warns of split share trading if no-deal Brexit
Huw Jones – Reuters
European Union preparations for a no-deal Brexit would split stock markets in Europe, although the damage could be reduced if Britain spelled out in advance its approach to trading, a top EU regulator said on Tuesday.
The EU angered market participants in March when it said that if there is a ‘no-deal’ Brexit, investors in the bloc would only be able to trade shares which are listed in continental Europe as well as 14 which have a listing in Britain.
‘Dividend Aristocrats’ Shrug Off Recent Volatility
Lawrence C. Strauss – Barron’s
Two recent market selloffs—the fourth quarter of 2018 and last month—do not make a trend.
But in both instances, the companies with long-term and consistent dividend increases held up relatively well across various market capitalizations.
Bank of England calls ‘last orders’ on Libor benchmark
Cat Rutter Pooley and Katie Martin – Financial Times
The Bank of England has told banks it will intensify scrutiny of their plans to switch away from the discredited Libor benchmark, sticking to the plan that the rate will be retired at the end of 2021.
David Ramsden, the BoE’s deputy governor for markets and banking, said in a speech on Wednesday that it was “last orders” for the interest rate and that banks must stop adding to their post-2021 Libor exposures. By some measures, he added, the task is on a bigger scale than preparing for Brexit.
Here are the latest stock-market moves by the top billionaire stock pickers
Arjun Reddy – Business Insider
Some of the world’s top stock pickers are making moves amid the recent and accentuated stock-market volatility, which has been caused by trade tensions and concerns about the Fed’s monetary policy stance.
Markets Insider details the latest moves and top holdings of 12 billionaire investors, using data from WalletHub.com. The data represents the investors’ positions as of March 31, 2019.
Legendary investor Stanley Druckenmiller made a blockbuster trade by dumping his stocks and going all in on Treasurys after Trump escalated the trade war with China
Arjun Reddy – Markets Insider
Stanley Druckenmiller says he put the brakes on his stock-market exposure following President Donald Trump’s May 5 tweet raising the stakes in the trade war with China.
In a Monday interview, conducted by Scott Bessent of Key Square Capital Management at The Economic Club of New York, the billionaire investor said he reduced his equity exposure to zero and went all in on US Treasurys following Trump’s threat to raise tariffs on Chinese goods.