Bank of America Warns the Fed Won’t Rush to Stock Market’s Rescue This Time

Oct 12, 2021

Lead Stories

Bank of America Warns the Fed Won’t Rush to Stock Market’s Rescue This Time
Nikos Chrysoloras – Bloomberg
The U.S. Federal Reserve may not be so eager to rescue the stock market this time around, according to Bank of America Corp. strategists.
“The Fed may be less willing to so easily deviate from tapering plans and talk the market back up as during the last cycle,” BofA strategists including Riddhi Prasad and Benjamin Bowler said in a note. As reasons for their skepticism they cite equity valuations and returns accelerating to “extremes,” and “increasingly real” risks of inflation overshooting.

Another Earnings Season Is Here. What to Expect This Time.
Jacob Sonenshine – Barron’s
Earnings season kicks off this week—and it may take some unusually impressive results for stocks to rise after them.
Reports from S&P 500 companies have been trickling in—only 21 companies in the index had reported through Monday—but this week marks the beginning of what is known as earnings season. Investors will hear from Delta Air Lines (DAL), Walgreens Boots Alliance (WBA), and UnitedHealth Group (UNH), plus, banking heavyweights JPMorgan Chase & Co. (JPM), Bank of America (BAC).

Top 14 meme stocks this week on Reddit: Tesla stays hot, Ocugen explodes 25% higher, and Square attempts a comeback after a 10% selloff
James Faris – Business Insider
Meme stocks have had a rough month as cryptocurrencies rally and investors focus on buying the dip in the broader stock market. GameStop (GME) and AMC Entertainment (AMC) are down 12% and 28% over the past month, respectively, though the volatility has ebbed in October.
Despite the bumpy road last month, meme stocks have still enjoyed an outstanding 2021 overall. A so-called “retail revolution” began early this year when small-time investors chose to support beaten-down firms like GameStop and AMC, even as Wall Street hedge funds bet against them. Shares of the two original meme stocks are still up 923% and 1,733% year-to-date, respectively.
But what’s even crazier than the mind-bending rally in shares of meme stocks is that the movement appears to have staying power.

Oil whipsaws, then steadies as energy crunch feeds volatility
Stephanie Kelly – Reuters
Oil prices steadied after whipsawing in a volatile session on Tuesday, as traders weighed the effect that higher energy costs could have on the global economic recovery.
Brent crude fell 32 cents to $83.33 a barrel by 12:53 a.m. EDT (1653 GMT). It earlier hit a high of $84.23 a barrel and a low of $82.72 a barrel. On Monday it hit $84.60, its highest since October 2018.
U.S. oil futures rose 6 cents to $80.58 a barrel, after ranging between $81.62 and $79.47.

Stocks Dive As Market Dynamics Change Rapidly
Michael Kramer –
Stocks started the day higher, but that didn’t last for very long, with the S&P 500 finishing the day lower by almost 70 bps closing at 4,360, erasing that big rally we had last Thursday while filling the gap. The S&P 500 is in a clear downtrend at this point, and there is no denying that with each high lower than the previous.
The only thing left to be seen is if the next low is lower than the last. For that, we will need to break 4280; I don’t think that will happen Tuesday, but I think it will happen over the next few trading sessions.
The market mentality has changed; it is just that simple. It is not the same market it was before September; the tone has changed.
One such thing that has changed is the VIX.


MIAX Reports Record SPIKES Futures Trading on MGEX in September 2021 and New Daily Record Volume of 14,890 Contracts
September 2021 Average Daily Volume of 7,502 contracts, up 92.2% over August 2021
MIAX , creator and operator of high performance securities exchanges, products and services, today announced average daily volume (ADV) for SPIKES Futures in September 2021 reached 7,502 contracts, a new monthly record and representing a 92.2% increase over the 3,904 ADV in August 2021. In addition, SPIKES Futures volume on September 9, 2021 totaled
a new daily record of 14,890 contracts.

Over 1,800 Firms Agree To Leverage U.S. Institutional Trade Matching Capabilities In DTCC’s CTM
Mondovisione – DTCC
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced that the community leveraging DTCC’s Central Trade Manager (CTM) service for U.S. domestic trade matching has grown to over 1,800 firms, as organizations further consolidate global post-trade flows on a single platform. With this adoption, 99% of U.S. trade flow volumes on the legacy DTCC OASYS service have migrated or are in the process of migrating to CTM.
CTM, DTCC’s platform for the central matching of cross-border and domestic transactions, automates the trade confirmation process across multiple asset classes, including equities, fixed income, repurchase agreements (repos) and listed options.

SGX reports market statistics for September 2021
Singapore Exchange (SGX) today released its market statistics for September 2021. Concern over heightened regulatory risks in China spurred volume gains in SGX’s suite of China-access products, while supply-chain bottlenecks in commodity markets fueled derivative hedging in both cargo and freight.

The Week that Was: October 4 to October 8
Kevin Davitt – Cboe
A concise weekly overview of the U.S. equities and derivatives markets
Last week (October 4 – October 8), monthly jobs data was released with 194,000 new jobs reported falling well below expectations of 500,000 or more. The unemployment rate fell to 4.8%, which was better than expected, however, the labor participation number declined. The Bureau of Labor Statistics revised the July and August job gains and released higher numbers. The weakest portion of the September report was driven by fewer government jobs. The domestic economy is still about 5 million jobs shy of pre-pandemic highs.

Regulation & Enforcement

EU rushes to avert new rules on failed trades
Philip Stafford and Laura Noonan – Financial Times
Brussels is racing to delay the introduction of new rules on trades that fail to settle, leaving banks and asset managers uncertain whether they need to spend hundreds of millions of dollars on compliance with standards likely to be rewritten.
EU country representatives will meet this week to discuss a route through the Brussels legislative process to halt the arrival of the contentious rules, which market participants have warned would harm the region’s capital markets, and hit investors around the world.

Prepared Remarks at SEC Speaks by Chair Gary Gensler
Thank you. I’m happy to appear at SEC Speaks for the first time as Chair of the Securities and Exchange Commission.
This event provides great continuing legal education to lawyers, accountants, and other market professionals. It also gives a platform for dozens of the talented and dedicated SEC staff and directors to share some insights about our work…
As I wrote while researching these issues at the Massachusetts Institute of Technology,[1] “[f]inancial history is rich with transformative analytical innovations that improve the pricing and allocation of capital and risk.” This ranges from Fibonacci’s development of present value formulas in the 13th century to the development of the Black-Scholes options pricing model in the 1960s.


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