Hedge Fund Bears Dominate S&P 500
Callie Bost – Bloomberg
The wall of worry has gone back up and hedge funds don’t think U.S. stocks will get over it this time.
They’re expressing the view in futures tracking the Standard & Poor’s 500 Index, where bearish positions outnumber bullish ones by the most in eight months. Skepticism has crept into an exchange-traded fund tracking the gauge, too, as short interest has climbed to the highest since October.
***DA: Well, it has sure been a heck of a run.
Stocks’ Volatility Surges as Traders Fear the Worst
Anthony Mirhaydari – InvestorPlace
An ominous feeling descended on Wall Street Monday as the situation surrounding the Greek bailout negotiations made no progress over the weekend. In fact, there were reports that eurozone countries are preparing for a possible debt default by Greece — with a $1.8 billion bundle of payments due to the International Monetary Fund at the end of the month — by readying capital control measures.
***DA: Some of us have been preparing for a Greek default since 2011.
Greek fears erode market impact of ECB stimulus
Worries over a potential Greek exit from the eurozone triggered significant volatility in the debt of countries on the geographic periphery of the currency bloc on Tuesday, eroding the impact of the European Central Bank’s recent attempts to suppress borrowing costs by buying bonds.
Peripheral bond yields, which move inversely to prices, remain around levels seen late last year, before investors started anticipating the ECB’s EUR1tn bond-buying programme which launched in March and is aimed at stimulating the economy.
***DA: The ECB stimulus was never about buying bonds. It was about buying time.
Make A Decision Already
The investing community is either really old or thinks it’s really well versed in history.
The prospects of interest rates going higher must be evoking memories of the Jimmy Carter era when personal experiences may have been pretty painful if on the wrong side of a prime interest rate of 21.5%.
I’d be afraid, too, of reliving the prospects of having to take out a 20% loan on my Chevrolet Vega.
The interest rate isn’t what would bother me, though. That Vega still evokes nightmares.
***DA: The Vega was a cut above contemporary alternatives such as the AMC Pacer, with its terrarium back window that heated up to about 200 degrees, and the Ford Pinto, with its exploding gas tank.
The Grexit: Can We Just Get the Fear Spike Over With Already?
Adam Warner – Schaeffer’s Investment Research
Looks like the long awaited “Grexit” is here. Wahoo! (Full disclosure: I hate those made-up combo words like “Grexit” and “Brangelina” and “A-Rod.”)
What does it all mean? Well, I don’t really know.
I’m fairly certain it’s mostly factored into the marketplace, since this story has hung around longer than the actual Greek Empire. The fear is that it has set off a disastrous chain of events a la the Lehman Contagion in 2008.
CMC Markets UK
It may be a volatile couple of weeks for global equity markets, and traders will enjoy embracing it.
We have several key events due to drive stocks these next week’s, including:
1) The FOMC decision this week, which could set stocks either way;
2) The possible continuation of the Greece versus Troika standoff , which so far looks like it may go to head with the worst possible outcome;
3) Closer to Asia, we have the possibility of a bigger outbreak of the MERS virus especially in North Asia. This could rattle confidence and bring fear to overheating equities there.
Moreover, these two weeks may see several ‘technicalities’ which could affect stocks wildly, possibly with a negative bias.
Saudi Arabia equity market opening just the start
There’s a distinct sense of déjà vu around the opening up of Saudi Arabia’s stock market to foreign investors.
The kingdom offers a tempting prospect. It represents 5.5 per cent of total emerging markets market capitalisation and it is bigger than Mexico, Turkey, South Africa and Russia, both in terms of size and liquidity.
ICE to Launch Eris Standard Interest Rate Futures on June 29; Introduction will Include Euro and Sterling Rates
Press Release via MarketWatch
The futures will trade and clear alongside the ICE Swapnote complex, which launched in 2001 as the first interest rate swap futures contract, as well as ICE Futures Europe’s extensive European interest rate futures and options portfolio, providing margin efficiencies for customers.
LCH.Clearnet sounds alarm over declining use of repo
One of the world’s biggest clearing houses has warned it may soon reach the limit of its ability to use the short-term financing market to park its collateral as banks are squeezed by tougher regulations
LCH.Clearnet, the world’s largest interbank swaps clearer, said there may be limits to the amount of customer margins it can send to the repurchase, or repo, market as regulation constrains customers.
Regulation & Enforcement
SEC Asks for Public Comments on Exchange-Traded Products
John D’Antona Jr. – Traders Magazine Online News
The Securities and Exchange Commission announced that it is seeking public comment to help inform its review of the listing and trading of new, novel, or complex exchange-traded products (ETPs).
The request, made via its website, looks to address key issues that arise when exemptions are sought by a market participant to trade a new ETP or when a securities exchange seeks to establish standards for listing new ETPs.
There’s a storm brewing for gold — look at the options skew
Ole Hansen – TradingFloor
The rangebound nature we have witnessed in gold for the past three months has left many investors sidelined looking for opportunities elsewhere. Greece has seen one deadline come and go and at this stage we seem to be further away from a solution than ever. The gold reaction to these uncertainties has been unimpressive with the price sitting near the lower end of its range.