Hedge funds braced for second stock market plunge; Airlines Lose Billions of Dollars in the Oil-Market Casino

Jun 4, 2020

Lead Stories

Hedge funds braced for second stock market plunge
Laurence Fletcher – Financial Times
Hedge funds are getting ready for another slump in stock markets after growing uneasy that surging prices do not reflect the economic problems ahead.
Some managers fear that equity investors, used to buying the dips during the decade-long bull market that ended in March’s sharp sell-off, have become too complacent about how quickly economies can recover from the coronavirus crisis and how effective stimulus packages from central banks and governments can be.

Airlines Lose Billions of Dollars in the Oil-Market Casino
Alex Longley – Bloomberg
Many of the world’s airlines already stung by the pandemic grounding flights are now finding out what a risky place the oil market can be.
Ten airlines in Europe and the Asia-Pacific — where carriers tend to purchase oil derivatives to hedge against volatility in fuel prices — have lost about $4.65 billion on those contracts this year, according to financial results compiled by Bloomberg through June 3. Deutsche Lufthansa AG and International Consolidated Airlines Group SA account for about half the total.

Exchanges and Clearing

The Small Exchange Secures $4 Million From Interactive Brokers and Phillip Capital; New Exchange Provides Futures Products and Will Offer Options to Global Brokerage Firms
Business Wire
The Small Exchange, a new futures exchange offering smaller, simpler products aimed toward retail customers, today announced securing $4 million in investment from Interactive Brokers (Nasdaq: IBKR) an automated global electronic broker, and Phillip Capital Group, a global financial services firm. As strategic partners, both firms will be key participants on the Small Exchange.

Singapore Exchange Shares Drop Most Since 2003 On end Of MSCI Licence – FTSE Mondo Visione Exchanges Index Up By 6.7% In May
The stock price of the Singapore Exchange plunged on Wednesday 27th May after MSCI announced that it had signed a licensing agreement with Hong Kong Futures Exchange, a subsidiary of Hong Kong Exchanges and Clearing, to introduce 37 futures and options contracts. MSCI also announced that it intended to continue to license the MSCI Singapore Index to the Singapore Exchange for a listed futures contract, in addition to allowing HKEX to list a contract on the index. The license to SGX for all other MSCI indexes will expire in early 2021. Singapore Exchange shares fell 7% on 28th May, extending the previous day’s 11.6% slump – the biggest in over 16 years.

CME Data Shows Institutional Investors Undeterred by Bitcoin Price Drop
Marcel Pechman – Cointelegraph
This week Bitcoin price corrected sharply after rejecting at $10,400 but CME BTC futures data shows institutions remain bullish. CME Bitcoin (BTC) futures and options markets expired on May 29, and despite a $100 hiccup, the price of the largest digital asset on CoinMarketCap held up nicely around the $9,400 level. As the market entered this last trading session, open interest for CME Bitcoin futures expiring in May was rather small at $30 million. This does not mean institutional traders abandoned Bitcoin markets, as open interest for upcoming months remains at a healthy $400 million level.

Cboe Global Markets Lists for Trading the First Proxy Model, Semi-Transparent ETFs with Fidelity
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced it has listed for trading three actively managed, semi-transparent exchange traded funds (ETFs) from Fidelity Investments: the Fidelity Blue Chip Value ETF, Fidelity Blue Chip Growth ETF and Fidelity New Millennium ETF. With the launch of these ETFs, Cboe expands the suite of actively managed, semi-transparent ETFs listed on its exchange.

Regulation & Enforcement

This notice is to confirm that Nasdaq PHLX, LLC (“Phlx”); Nasdaq ISE, LLC (“ISE”); Nasdaq GEMX, LLC (“GEMX”); and Nasdaq MRX, LCC (“MRX”, and collectively the “Options Exchanges”) are extending the June 1, 2020 deadlines for the filing requirement described below. The new filing deadlines for the following requirements will be June 30, 2020.


Capitalab announces execution of its first swaption margin optimisation trades leveraging LCH SwapAgent
Maria Nikolova – FinanceFeeds
Capitalab, a division of BGC Brokers LP, an entity within international brokerage and fintech company BGC Partners, today announces the execution and subsequent compression of Capitalab’s first swaption margin optimisation trades leveraging LCH SwapAgent, a service for the non-cleared derivatives market.


How to Play a Market That Shrugs Off Everything
Steven M. Sears – Barron’s
The stock and options markets are suffering from what might be called Neropathy. Just as the Roman emperor Nero played his fiddle as Rome burned around his palace, the markets are seemingly oblivious to the pain and destruction that has enveloped much of the U.S. and the world.
Despite massive unemployment and severe economic contractions sparked by an as-yet incurable virus, the Dow Jones Industrial Average and the S&P 500 index are nearing their highest levels ever. Not even days of nationwide protests sparked by the death of George Floyd while he was being arrested in Minneapolis have tarnished the stock market’s momentum.

ETF investing opportunities, advice from head of BlackRock’s iShares
Akin Oyedele – Business Insider
Exchange-traded funds proved their naysayers wrong during the intense period of volatility that transpired earlier this year.
These baskets of securities exploded in usage during the recently concluded bull market, including among retail investors with less-sophisticated strategies. As a result, critics became concerned that during a period of intense market stress, money would gush out just as rapidly and leave many investors burned.

How to invest as US economy reopens, market strategy from Glenmede
Marley Jay – Business Insider
Do things feel 19% of the way back to their pre-pandemic normal?
There might not be any firm way to measure that, but Glenmede — the $40 billion wealth- and investment-management firm — says that’s the case. It has evaluated consumer and business data and concluded that the US economy has recovered about that much of its post-pandemic and social-distancing losses.


The Things That Used to Matter to Stock Investors Don’t Anymore
Lu Wang – Bloomberg
Rising earnings. Economic growth. Bargains. A lot of the stuff investors were thought to cherish has been in short supply in the rally that has swept markets since March.
Also: share repurchases, all but gutted as the coronavirus lockdown put a premium on conserving cash. A measure of equity demand that tallies announced buybacks and takeovers fell to $12 billion last month, the second-lowest level in the past decade, data compiled by TrimTabs Investment Research show. Meanwhile, stock offerings exploded, pushing the total to a record $94 billion.

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