Observations & Insight

Brand New: LME’s Jones Says Exchange Is Set For Growth, 2 Ways


London Metal Exchange had quite a year in 2014.

From its integration into the Hong Kong Exchanges & Clearing, launching its own clearinghouse, and addressing the metals warehousing problems, LME has the pieces in place for expansion. Garry Jones, CEO of the LME spoke with John Lothian News about the exchange’s focus on China and the potential for new products in the coming months.

LME launched its own clearing house last September and has brought its technology in-house, under the HKFE. All of that has added staff to LME, tripling its payroll over the past three years, as well as a new building set to open later in the year.

“There’s two main themes for the LME,” he said. “Our business, given that 40 percent of the world’s metals production and consumption is in China, we’re focused on that as well.”

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Lead Stories

Warren Buffett on risk and volatility
Myles Udland – Business Insider
Volatility and risk are not the same thing.
In his most recent annual letter to shareholders, Berkshire Hathaway CEO Warren Buffett wrote about the difference between the two and how many investors conflate these concepts, costing themselves money.

***DA: It also helps to be Warren Buffett. When he sold gobs of long-term at-the-money puts on several world indexes right before the crash in 2008, his risk was not the same as mine. When one is privately held and deep pocketed one is not subject to margin calls or daily NAV.

CBOE Holdings Target of Unusually High Options Trading (CBOE)
Karim Khaledi – Mideast Times
CBOE Holdings (NASDAQ:CBOE) was the recipient of unusually large options trading on Monday. Stock traders purchased 2,622 put options on the stock, AnalystRatingsNetwork reports. This represents an increase of approximately 447% compared to the typical volume of 479 put options.
In other CBOE Holdings news, CEO Edward T. Tilly sold 6,250 shares of the company’s stock in a transaction dated Monday, March 23rd. The stock was sold at an average price of $59.39, for a total value of $371,187.50. The sale was disclosed in a document filed with the SEC, which can be accessed through this link.

On Monday, Bad News Is Good News, Again
Paul Vigna – WSJ
Thankfully for Wall Street’s bulls, bad news is good news again.
U.S. stocks are rising on Monday, as traders return from a three-day Easter/Passover holiday weekend. The Dow Jones Industrial Average is up more than 150 points, and the S&P 500 is up more than 15 points. At 2084, the index has risen above technical tripwires around 2050 and 2030. It didn’t take long for the Street to change it mind about the jobs report.

***DA: Pile on, baby! With no imminent spike in interest rates due to a weak jobs number, the party continues for another month.

Did Dudley Do Right by the Fed?
Jared Dillian – The Street
There was a 40-handle rip in the S&P 500 Monday after William Dudley gave us a look at the Fed’s cards.
That rate hike in September is looking less and less likely.
I’ve said in other forums that the Fed would take so long to hike rates that the economy would crap out by the time it actually got around to hiking rates. I don’t think Dudley or anyone else at the Fed really thinks the economy is going to crap out, but you get one soft number and people start talking recession.

Asian markets outperform Western rivals
Luke Jeffs – Futures & Options World
Asian exchanges outperformed their European and US peers in March, showing solid growth in their derivatives segments compared to their Western rivals.
The Singapore Exchange led the pack last month, reporting on Monday derivatives volumes rose 56% to 14.8 million contracts and a daily average for the month of 678,000 contracts, up 46% on last year.

XIV Performance Since Inception – VelocityShares Daily Inverse VIX Short-Term ETN (NASDAQ:XIV)
Dane Van Domelen – Seeking Alpha
VelocityShares Daily Inverse VIX Short-Term ETN (NASDAQ:XIV) is an exchange-traded note that seeks to achieve daily gains opposite that of the S&P 500 VIX Short-Term Futures Index ER (SPVXSP). Despite the fact that XIV targets SPVXSP, not VIX, this article looks at relationships between XIV and VIX, and between XIV and the S&P 500. This article focuses on the performance of XIV rather than its inner workings.

***DA: Since it is the inverse of the fear index, should we call it the “greed index?”


New BATS chief steps in amid volumes peak
The Trade News
BATS Global Markets has reported a spike in trading volumes in its US options and equities markets, along with BATS Chi-X Europe and its trade reporting facility, as its new CEO takes the helm.
Chris Concannon, who joined BATS as president in December 2014, assumed the chief executive role on 31 March, as long-serving Joe Ratterman became chairman.

BATS March Volume & Activity: Record Market Share of 9.4% for BATS Options
Press Release – BATS
BATS Global Markets (BATS) today reported March volume, market share, and monthly highlights including its best month on record for U.S. Options market share. BATS Options reported 9.4% market share, up from 4.1% one year ago and surpassing the previous monthly market share record of 8.8% set in January 2015.
Additionally, in Europe, BXTR, BATS Chi-X Europe’s trade reporting facility, had its most successful month ever with more than EUR471.1 billion reported in total during March, an average of EUR21.4 billion each trading day.
jlne.ws/1a15X8G (PDF)

Euronext Announces Monthly Trading Volumes For March 2015
Press Release – Eurex via Mondovisione
On 20 March we reached a yearly record high on Dutch individual equity options at 310,057 contracts. It was the seventh most active day since January 2014.


‘Fast Money’ Recap: ‘All Systems Go’ for the Bull Market
Bret Kenwell – The Street
It opened lower Monday but the S&P 500 quickly rallied off its session lows and finished up nearly 1%. “It’s all systems go,” Tim Seymour, managing partner of Triogem Asset Management, said on CNBC’s “Fast Money” TV show.
Risk assets are still performing well, he said, pointing out the iShares MSCI Emerging Markets ETF (EEM) climbed 1.3% on the day. The dollar can continue lower while other investment opportunities in Europe and commodities continue higher. Seymour also likes financial stocks.

Strategist reveals what the bulls should pray for
Alex Rosenberg – CNBC
Tony Dwyer, chief market strategist at Canaccord Genuity, is no bear. With a year-end S&P 500 target of 2,340, he is actually one of the most bullish strategists on the Street. But Dwyer is looking for certain things to happen before being an “aggressive buyer.”
“We’re kind of in this no-man’s-land tactical condition for the market,” Dwyer said.
Yet four signs would tell him stocks are “oversold,” meaning that market dynamics would grant the brave an attractive opportunity to buy in.


What Is a Bear Market?
What do investors mean when they talk about a bear market? It depends on whom you ask.
Many say it’s when stock indexes drop by at least 20% in a short time. Some specify a two-month period. Others, however, see it differently.

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