CME NASDAQ Options Volume Surges on Pullback
Doug Ashburn, John Lothian News
While last Friday’s down move in the U.S. stock market was broad-based, the NASDAQ 100 index fared worst of all, falling 2.7 percent on the disappointing March employment report. According to John Nyhoff, executive director of equity index products at CME Group, traders had been scaling back on tech and biotech shares in recent weeks, and the trend accelerated Friday, leading to the largest single day drop in the NASDAQ since November 2011. CME Group’s NASDAQ 100 options volume surged to a record 38,057 contracts, shattering the previous record of 29,014 set on February 5 of this year.
In other words, the equity options volume story from last year had a lot to do with writing calls for income. But those numbers have been eclipsed, at least at CME, by put trading during market declines.
Quote of the Day
“A prolonged crisis is unlikely. Growth should support the government and help the industrial sectors to resolve the problems relating to excess capacity over time. And that in turn should limit the systemic risk for Chinese banks.”
Naoko Nemoto and Liao Qiang, analysts writing a report published today in the story, “China Growth Enough to Avert Prolonged Bank Crisis, S&P Says”.
Fink looks to show off BlackRock’s bench strength
By Henny Sender and Stephen Foley, FT
BlackRock’s top clients include the world’s largest sovereign wealth funds and pension funds. When they want insight into markets and capital flows, the person they want to speak with is Larry Fink, who built BlackRock into the world’s largest asset manager. ..
***DA: Building a team around a franchise player works until the franchise player wishes to retire. BlackRock is smart to work on the succession plan now.
BlackRock Hires Barclays’s Knapp to Lead New Bond Team
Alexis Leondis and Joseph Ciolli – Bloomberg
BlackRock Inc. (BLK), the world’s largest money manager, hired Barry Knapp from Barclays Plc to oversee a new strategies team for its active bond unit.
Knapp, 52, who was head of U.S. equity portfolio strategy for the London-based bank, will join the money manager later this year to lead and build the thematic strategies team, according to a memo sent to employees today by New York-based BlackRock. The group will focus on major structural themes, identify investing opportunities and figure out ways to capture them, according to the memo.
China Growth Enough to Avert Prolonged Bank Crisis, S&P Says
Rachel Evans – Bloomberg
Steady growth in China should help avert a drawn-out crisis in its banking sector by aiding industrial consolidation and economic rebalancing, according to Standard & Poor’s.
“A prolonged crisis is unlikely,” analysts Naoko Nemoto and Liao Qiang wrote in a report dated yesterday and released today.
***DA: Famous last words?
SEC forms squad to examine private funds – sources
By Greg Roumeliotis and Sarah N. Lynch, Bloomberg
The U.S. Securities and Exchange Commission (SEC) has put together a dedicated group to examine private equity and hedge funds, after the 2010 Dodd-Frank law required the funds to be regulated, according to people familiar with the matter.
***DA: Our story began with “systemic necessity” in Dodd-Frank. This is Chapter 2.
Bogus Private-Equity Fees Said Found at 200 Firms by SEC
By Alan Katz, Bloomberg
A majority of private-equity firms inflate fees and expenses charged to companies in which they hold stakes, according to an internal review by the U.S. Securities and Exchange Commission, raising the prospect of a wave of sanctions by the agency.
***DA: What do you mean I can’t expense my Ferrari?
Banks Urge Basel U-Turn on Global Asset-Backed Debt Rules
Jim Brunsden – Bloomberg
Banks from Deutsche Bank AG to Barclays Plc (BARC) attacked proposals to overhaul global capital rules for asset-backed debt, saying they risk choking securitization while clashing with efforts to boost lending to businesses.
***DA: If you ask us to assume default risk with our own money rather than with the public’s money, we simply cannot function.
U.S. regulators to vote on final bank leverage rules
WASHINGTON – Financial regulators will vote on Tuesday to finalize tough requirements for U.S. banks’ leverage that are expected to be stricter than the rules overseas firms must follow.
***DA: Um… are you listening?
Banks Given Two More Years to Meet Volcker CLO Standards
By Cheyenne Hopkins, Bloomberg
The Federal Reserve is giving banks an additional two years to comply with Volcker Rule standards for treatment of collateralized loan obligations after industry complaints that the requirements would lead to big losses.
***DA: Ah. That’s better.
Deutsche Börse Publishes Best Practice Guide For Entry Standard Corporate Bonds – Recommendations Serve As A Guide To Issuers, Intermediaries And Investors
Deutsche Börse today published its recommendations for issuing corporate bonds in the Entry Standard. The best practice guide is based on experience gathered over the past three years in SME bonds. Deutsche Börse published the guide together with several Deutsche Börse listing partners, the German Society of Investment Analysts and Asset Managers (DVFA) and the German Investor Relations Association (DIRK).
Europe’s top two central banks seek to revive ‘toxic’ assets
Sam Fleming and Claire Jones – Financial Times
Europe’s top two central banks are joining forces to push for the relaxation of rules on an asset class blamed for the global financial crisis, as they attempt to unclog credit flows in the region.
The European Central Bank and Bank of England aim to make a joint intervention as soon as this week’s International Monetary Fund meetings in Washington DC as they back a revival in the market for asset-backed security, or bundled debt.
Euro-Area Inflation Outlook Rises as ECB Mulls Stimulus
David Goodman and Lucy Meakin – Bloomberg
Euro-area inflation expectations are increasing as investors bet the European Central Bank will stoke prices, which rose last month at the slowest pace since 2009.
A gauge of inflation expectations based on German bonds was 16 basis points above an almost two-year low set in February as the nation sold index-linked securities due in 2030.
***DA: The verbal intervention is working, for now.
BOJ Refrains From Boosting Stimulus as Recovery Seen
Toru Fujioka and Masahiro Hidaka – Bloomberg
The Bank of Japan refrained from adding to unprecedented monetary stimulus as Governor Haruhiko Kuroda said the blow to the economy from last week’s sales-tax increase will fade during the summer.
Japanese Offload Record Dutch Sovereign Debt, Sell Treasuries
Masaki Kondo – Bloomberg
Japanese investors sold a record amount of Dutch sovereign securities in February amid speculation debt prices will fall globally as the Federal Reserve continues to reduce purchases of U.S. securities.
UAE Central Bank To Launch Overnight Lending Facility On Apr 15
The central bank of the United Arab Emirates will introduce on April 15 a mechanism allowing the country’s banks to borrow funds from it overnight, to help their liquidity management.
The Interim Marginal Lending Facility (IMLF) will let lenders use certain assets as collateral to obtain one-day loans, according to a letter to banks which was published on the central bank’s website on Tuesday.
Strong Euro Creating Deflation Risk, Belgium’s Geens Says
Ian Wishart – Bloomberg
The strength of the euro is creating a risk of deflation and hampering Belgium’s exports, Belgian Finance Minister Koen Geens said after the currency last month reached a 29-month high against the U.S. dollar.
“We have high wage costs, so our export competitiveness is suffering from the high euro,” Geens told Bloomberg News in Brussels today. Belgium is the sixth-largest economy using the single currency.
***DA: Time to get long waffle futures.
CQG and DirectFX add OTC FX with First Derivatives tech
First Derivatives, the provider of software and consulting services to the capital markets industry has announced that that CQG, a market data and advanced technical analysis provider, has partnered with foreign exchange firm Direct FX to add OTC trading capabilities using First Derivatives Delta Flow trading platform. The new agreement expands CQG’s FX market data and trade routing offering over CQG FX, a platform for foreign exchange professionals.
Indexes & Index Products
Carnage in the Nasdaq and Russell 2000 Indexes
Richard Gobel – The Street
Make no mistake about it. There has been some serious damage done to the Nasdaq and Russell 2000 indexes.
Since March 5, the Nasdaq is down 6.4% after getting closing down another 47.97 points on Monday at 4079.75. Even though that was 27 points off its day low of 4052, the Nasdaq is in Trend Bearish territory. That is a three-month or longer time frame.
***DA: After rising 38 percent last year, to call this pullback “carnage” is a bit of a stretch.
North America’s top 15 equity funds vs. indexes
Jacqueline Nelson – The Globe and Mail
Performance varied in this border-straddling category. Six funds beat the U.S. S&P 500 Composite Total Return index, while all but one bested the Canadian S&P/TSX Total Return benchmark. The chart topper was the Trimark North American Endeavour Class fund with annualized gains of 48.2 per cent in the year to Feb. 28.
FTSE TMX Global Debt Capital Markets acquires MTS’ indices business
Expands FTSE TMX Global Debt Capital Markets’ offering in fixed income
MTS is a leading provider of benchmark indices for European fixed income
Broadens FTSE TMX Global Debt Capital Markets’ complementary product portfolio
Client demand for fixed income indices continues to grow rapidly
FTSE TMX Global Debt Capital Markets has confirmed that it has acquired the indices business of MTS, whose indices track the performance of the largest and most widely traded government issued securities in European bonds. MTS is one of Europe’s premier electronic fixed income trading markets and is majority owned by London Stock Exchange Group (LSEG). FTSE TMX Global Debt Capital Markets is a joint venture between FTSE Group and TMX Group’s information services division, TMX Datalinx*.
STOXX Updates Rules On Country Classification
STOXX Limited, a leading provider of innovative, tradable and global index concepts, today announced an update of its country classification rules. The announcement follows a meeting of the STOXX Advisory Board. The updated rulebook is introduced with immediate effect.
Second Quarter Will Not Be A Great Time For Gold Prices — Analysts
Kitco News (via Forbes)
Commodity analysts are expecting gold to remain weak in the next three months as seasonal factors, an improving U.S. economy and lack of bullish momentum drag prices down.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that the second quarter is usually a quiet time for gold, but this year traders could be more sensitive to increased weakness in the next three months, especially after a strong first quarter.
***DA: Will we test the $1195 low from last year in the second quarter?
Fool’s Gold Report: As Stocks Plunge, Why Isn’t Gold Soaring?
Dan Caplinger – The Motley Fool
After a strong Friday, gold investors had hoped that continued stock market pressure would lead to a bigger rebound for gold and other precious metals Monday. But even though stocks dutifully dropped, gold refused to play its part, falling back below the $1,300 mark and sending SPDR Gold Shares (NYSEMKT: GLD ) lower despite what would ordinarily have been favorable concerns about the volatile situation in Ukraine. With the notable exception of Newmont Mining (NYSE: NEM ) , gold-mining stocks largely followed the metal lower, and it’s increasingly unclear what will propel gold further after an encouraging start to 2014.
Gold Least Preferred for Morgan Stanley as Decline to Resume
Glenys Sim – Bloomberg
Gold is Morgan Stanley’s least preferred commodity among metals as prices resume a decline this year on the outlook for rising U.S. interest rates and low inflation expectations.
The factors that boosted bullion in the first quarter, including tensions in Ukraine, are set to weaken, analyst Joel Crane wrote in a report today.