Platts looks to protect Brent benchmark
International Petroleum Week has kicked off in London with moves by Platts, the price reporting agency, to protect the Brent benchmark from dwindling North Sea production. Dated Brent is the global oil marker used by traders and companies to price around two thirds of the world’s crude. It also underpins billions of dollars of trading in futures, options and other derivatives, writes Neil Hume, Commodities Editor. However, production of the four physical streams that underpin the benchmark – Brent, Forties, Oseberg and Ekofisk – is falling.
****SD: In other oil news, A Record Number of Investors Are Piling Into Oil and Traders are placing huge bets on the future of oil. If you’re looking for a more longform take on how oil can blast a region’s economy, take a look at ‘Zombie’ stocks haunt Canada’s oil patch, but buyers aren’t biting in worst bear market in a generation
Why We’re Vulnerable to Even More Volatility
Schaeffer’s Investment Research
After multiple indices closed January above round-number and longer-term moving average support following intra-month breaks, the first week of February picked up where the month of January left off — with losses. The main catalyst was Friday’s employment number, which was significantly below expectations. And just as it appeared that short-term traders could be in the early stages of taking on a more constructive view of the market, pessimism returned, pushing equity benchmarks back below support.
Spot FX Trading Back in Style at Thomson Reuters as Volumes Rise 35.2% in January
Thomson Reuters has reported its FX trading volumes for January. Volumes include activity on their FXall and Thomson Reuters Matching platforms for FX spot, forwards, swaps options and non-deliverable forwards (NDF) products.
The Option Queen Newsletter
The good news regarding last week’s action in the market is it felt a lot worse than it actually looks on a chart. Now, we aren’t saying that it was a pleasant decline, but this was a decline inside a trading range. With that said, we must alert you to the fact that the Bollinger Bands have become narrow and that typically warns us to fasten our seat-belts for a jolt.
Guggenheim’s $240 Billion Man Says Nasdaq to Tumble Below 3,800
Technology stocks will tumble further this year as investors flee to safety and buyers stay on the sidelines, according to Scott Minerd, chief investment officer for Guggenheim Partners LLC. The Nasdaq Composite Index will probably drop below 3,800, sliding another 13 percent, he said. The tech-heavy index already has fallen that much this year, closing at 4,363 on Friday, its lowest since October 2014. That’s more than 16 percent below the all-time high it reached in July.
Options Market Update
The past week ended in a mini-crash for many tech stocks and the Nasdaq, and while the Dow and S&P also lost some ground, they did hold up much better. For the week the S&P 500 lost 3.1%, the Dow fell by 1.59% and the Nasdaq dropped 5.44%. For the bulls, Friday’s awful market action should be concerning as the rolling bear market has now seemed to have shifted to technology stocks. However, the Friday Jobs Report showed that the U.S. unemployment rate fell below 5% for the first time since 2008, and formerly beaten down sectors are finding buyers as the Industrials and Materials sectors have held up amid the market selloff.
India cbank panel recommends guidelines for bond options
An Indian central bank panel has issued recommendations for introducing bond options in India that include simple structured contracts and allowing companies to trade up to 50 million rupees ($736,024.73) without documented underlying exposures.
The Probability of Negative U.S. Rates Is on the Rise
Global central banks have opened the door to negative U.S. interest rates, in Wall Street’s view.
After the Bank of Japan cut some rates below zero last month to spur growth and inflation, strategists are weighing the Federal Reserve’s options in case of a crisis. If the world’s biggest economy weakens enough that traditional policy measures don’t help, the Fed may consider pushing rates below zero, according to Bank of America Corp. and JPMorgan Chase & Co.
WFE Monthly FOCUS E-Zine – February 2016
World Federation of Exchanges
The new issue is available on the WFE site. Contents include an in-depth interview with Nasdaq’s Sandy Frucher on global exchange collaboration, NYSE breaks new ground in compliance training, plus a look at the development of Arab exchanges, and of course, monthly market analysis and insight from the WFE statistics team.
CME taps ex-Deutsche prime head to run FX
Alice Atwood – FOW
CME Group is set to hire Deutsche’s former head of foreign exchange prime brokerage Paul Houston as its new global head of FX, according to sources.
VIX Goes Global
The CBOE Volatility Index, which has emerged since the 2008 financial crisis as one of the world’s most important reflections of investor sentiment, will soon be available during international trading hours. Next month, CBOE Holdings (ticker: CBOE) plans to begin disseminating the “fear gauge” from 3:00 a.m. to 9:15 a.m. Eastern Standard Time. The ability to more broadly reference the VIX will enable investors to better assess international market action. VIX is currently only quoted from 9:30 a.m. to 4:15 p.m. to accommodate New York trading.
****SD: In case you missed the press release last week.
CBOE Announces Alignment of VIX Index Administration with IOSCO Principles for Financial Benchmarks
CBOE Holdings, Inc. (NASDAQ: CBOE) today announced the administration of the CBOE Volatility Index (VIX Index), widely considered to be the world’s premier financial benchmark of future (30-day) stock market volatility, is in alignment with the Principles for Financial Benchmarks established by the International Organization of Securities Commissions (IOSCO).
CHX China Deal Shows US Equity Markets Still Envy of the World
A Chinese investment group’s purchase of the Chicago Stock Exchange would allow China’s investment community to reap the benefits of accessing the most liquid and efficient market in the world. Ultimately, the deal provides Chinese companies with an opportunity to attract new capital and investors to tap new opportunities for returns.
****SD: Lots of question marks moving forward
Regulation & Enforcement
Let there be light in U.S. Markets
Bloomberg Editorial Board
Renewed volatility in the U.S. stock market raises a question: If a freak event like the 2010 “flash crash” occurred again, would regulators have a better view of what was happening than they did back then? Not really. And therein lies a crucial challenge for the Securities and Exchange Commission. Periodic market glitches show how far the speed and complexity of trading has outpaced regulators’ capacity to monitor it. Over the past decade and a half, the daily volume of trade-related electronic messages has increased dramatically — by one estimate, 500-fold. Meanwhile, regulators still rely on an outdated patchwork of surveillance systems lacking even basic information, such as reliable time stamps and customer identification.
FTC Can’t Give Whistleblower Money Away
Jean Eaglesham – WSJ
It turns out that setting aside hundreds of millions of dollars for whistleblowers isn’t enough to lure tipsters in the multitrillion-dollar futures and swaps markets. Since its Whistleblower Program was launched in 2011, the Commodity Futures Trading Commission has spent more on administrative costs than it has paid out in bounties, according to a Wall Street Journal analysis of the agency’s data.
U.S. derivatives regulator says will ‘move very quickly’ to fix accounting issue
The U.S. regulator of the complex derivatives market that was recently found violating a government accounting law will work with Congress to fix its bookkeeping problems, its chairman said on Friday.
****SD: When I read this, I couldn’t help but think of elementary school when somebody would get called to the principal’s office and the rest of the peanut gallery would let out that nerve-wracking, “Ooooooooh.”
Paradise No More: CySEC Gets Tough
Although CySEC has often been mocked for its approach to regulation, it could still establish itself as a credible financial regulator in Europe after all.
Product Review: SwipeStox – Social Trading on Steroids or Tinder Meets Trading
In recent weeks, the popularity of a trading app called SwipeStox has been on the rise across app stores – both on iOS and Android. The latest version of the social trading app which is aiming to redefine how traders look at the process of selecting their next position is here and it seems to have gained brokerage backing.
****SD: Given the success of Robinhood, I’m not surprised at any new take on a trading app.
Market in Distribution Continues
Bob Lang – CBOE Options Hub
We started a new month this past week, but it was like déjà vu all over again. The Groundhog declared an early Spring on Tuesday, a change in weather. But regarding markets, you could have fooled me. It was the same action we have seen for weeks on end, and it doesn’t seem to be letting up. The vicious selling last week was magnified on Friday after a jobs report that seemed indicate the Fed may be trapped. I’m not so sure about that, but the market speaks louder than my opinion. The stock market is under severe distribution, and it doesn’t appear to be ending any time soon.
Weekly Outlook: Yellen Remarks and Grain Outlook
OpenMarkets – CME Group
Fed Chair Janet Yellen delivers her semi-annual testimony to Congress this week on Wednesday and Thursday. Market watchers will be looking at her testimony for signs of how the Fed might respond to the market volatility that has defined 2016 so far. Meanwhile, grain markets will be preparing for Wednesday’s supply and demand report from the USDA.
Week Ahead: Disney Earnings, Retail Readout Put Emphasis on Consumer
JJ Kinahan – Ticker Tape
Stocks wrapped the trading week on wobbly footing as investors digested a decidedly mixed reading on the U.S. job market and a fleeting short-term recovery for oil prices tied to a weaker dollar. Economic uncertainty and the pacing of a Federal Reserve response to hot-and-cold economic news will likely continue to drive market chatter in a new trading week, along with continued volatility for an oil market plagued by heavy supplies.
****SD: Also today, TD has an outlook for the tech sector
Doug Kass: My Current Take on the Market
I remain bearish and net bearish and net short as we get ready for another trading week to begin. I recently substituted my short of the SPDR S&P 500 ETF (SPY) with out-of-the-money SPY puts. This strategy increases my delta and short exposure as stocks fall, which is what I want right now for a multitude of reasons that I’ve previously outlined in my diary.
Weekend Review – VIX Options and Futures – 2/1 – ?
Russell Rhoads – CBOE Options Hub
Friday provided our first glimpse into how the economy was faring in January and the stock market apparently didn’t like what it saw. VIX finished the day up 7% which was just under half the over 15% rise we got last week. The February future managed an 11% gain to finish higher than spot VIX. However, backwardation is still in place with the February contract higher than the March contract. More on this after the chart and table below.
****SD: As you know, Mondays are busy days for updates. Also from the CBOE Options Hub: Weekly Review – Volatility Indexes and ETPs – 2/1 – 2/5, Weekly Review – Russell 2000 Index and Options – 2/1 – 2/5, and, a megaship collection, The Weekly Options News Roundup – 2/5/2016
VIX Measures of Volatility Boosted by Muddled Economic Outlook
Catherine Shalen – CBOE Options Hub
VIX volatility indicators for Treasury, equity and foreign exchange markets edged up this week as central bankers and investors appeared equally bemused by the crosscurrents in global economic news. Adding to ongoing concerns about China, low commodity prices, lack of inflation and lackluster growth, yields on sovereign bonds in Europe and Japan turned negative. Negative yields are sometimes viewed as a possible precursor to recession. The Bank of England is not expected to raise UK interest rates, and the date of a U.S. rate hike by the Federal Reserve is receding. The 10-year Treasury yield is still positive, but decreasing. On the other hand, many economists remain sanguine about the U.S. economy, in spite of slower employment growth and anemic spending by consumers and manufacturers.
Volatility Update: Options for volatility traders expand with VIX
Saxo Bank last week listed weekly options on the VIX volatility index
The CBOE volatility index is a widely used barometer of market volatility
Increasingly sophisticated retail traders are expanding their strategies to VIX options
Before trading VIX options, investors should learn the specifics of the contract
Our weekly OptionsLab webinar on Wednesday will discuss diagonal spreads
Intercontinental Exchange Chairman and CEO to Present at Credit Suisse Financial Services Forum on February 9
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today that Jeffrey C. Sprecher, Chairman and CEO, will speak at the Credit Suisse Financial Services Forum. The presentation will take place on Tuesday, February 9 at 1:30 p.m. ET. The presentation will be broadcast live over the Internet and can be accessed in the investor relations section of the ICE website.
CME Group Chief Financial Officer to Present at Credit Suisse Financial Services Forum
CME Group announced today that John Pietrowicz, Chief Financial Officer, will present at the 17th Annual Credit Suisse Financial Services Forum, in Miami, on Tuesday, February 9, 2016, at 10:15 a.m. (Eastern Time).
CBOE Holdings To Present At KBW Winter Financial Services Symposium On Thursday, February 11
CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that Edward T. Tilly, Chief Executive Officer, will present at the KBW Winter Financial Services Symposium in Boca Raton, Florida on Thursday, February 11 at 1:00 p.m. Eastern Time.