The John Lothian Daily Update is a podcast turning the daily JLN hits and takes comments, our original content and the stories and quips in the top box of First Read into a daily podcast.
Hits & Takes
There is no clear winner of the U.S. Presidential election yet. Hang on. Relax. Stay cool. Let the process work.
Senator Kelly Loeffler has advanced to a run-off election in her attempt to hold onto the Senate seat to which she was appointed. She recieved 1,229,561 votes, or 26.5% of the total. Rev. Raphael Warnock, a Democrat in the race, had 1,479,590 votes, or 31.9% of the total votes cast.
There is still time to register for FIA’s virtual Futures and Options Expo, taking place this 10-12 November. Expo-V brings you three days of programming including keynote sessions with Dr. Kathy Neuzil, SEC Commissioner Hester Peirce, revered Silicon Valley journalist Kara Swisher and CFTC Chairman and Chief Executive Heath Tarbert as well as 1:1 interviews with exchange leaders from Cboe Global Markets, CME Group, Eurex, ICE and Nasdaq. Industry experts will also explore lessons learned from the pandemic, trends shaping what’s next for cleared derivatives and opportunities to diversify the industry. Expo-V features a robust exhibit hall with more than 20 exhibitors and 9 fintech start ups in the Innovators Pavilion. This is your opportunity to connect with the cleared derivatives community. Learn more at FIA.org/expo and REGISTER!
The CME traded their first emini IPOX Futures Trades (IPOZ0) on Globex yesterday. This comes on top of the IPOX ETFs having surpassed $2 billion in AUM in late October.
ISDA’s Scott O’Malia has his latest podcast, “Episode 3: Building Momentum in Alternative Rates.” He will discuss how LIBOR is on the way out and what will replace it.
It is too late now, but states like Georgia should use a ranked-choice voting method for their statewide elections in cases where there are multiple candidates and no one gets a majority of votes. In this type of election, a vote ranks all of the candidates. All of the information about who the voters prefer is with the election officials. The election officials methodically remove the candidate who received the least number of votes and replace that voters’ choice with their next choice. The votes are then counted again. This proceeds until someone has over 50% of the vote. It would have saved a lot of money for a runoff election and given the state and the country greater certainty. Also, this method was suggested on a Scouting blog for use in a Senior Patrol Leader election as a way to reduce bad feelings about who did or did not get votes.
How much trading was there in October in front of the U.S. Presidential election? Well, the OCC reported October 2020 total cleared contract volume was 636,709,236 contracts, up 41.1 percent from October 2019. This marks the highest October ever and the fourth-highest month on record. Year-to-date average daily cleared contract volume through October was 28,862,569 contracts, up 46.3 percent from October 2019.
There were two new donations to the JLN MarketsWiki Education GoFundMe campaign yesterday. Peter Maragos, the CEO of Dash Financial, made a contribution, as did Jeff Gilfillan, vice president of Phillip Capital. Gilfillan is a veteran futures broker and strategist. Maragos is the CEO of one of the most interesting firms in the markets. You never know what they are going to do next.
Peak6 has a story on their website “Meet coder turned trader Roxy Rong.” You can read about how coding is Rong’s superpower!
The word of the day is “scupper.” A secondary definition is “to defeat or put an end to.” I saw this word used in an Ant Financial story, not a Presidential election story.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
Covering Your Downside – Shielding Against Market Downturns
By Matt Raebel – John Lothian News
The year 2020 has been a time of political and economic turbulence, resulting in significant volatility. For investors, it is a good time to look for strategies for mitigating downside risk exposure. An October 12 webinar from Cboe Global Markets offered to teach attendees how VIX products can be used for this purpose.
The webinar, titled, “Shielding Against Drawdowns Using VIX Tradeable Products,” was moderated by Cboe’s Matt Moran, head of index insights at the Cboe Options Institute. The speakers included Edward Szado, chair of the Department of Finance and associate professor at Providence College, and Joshua Lisser, senior vice president and head of the index strategies team at AllianceBernstein. The webinar was clearly not aimed at rookie options traders – attendees appeared to consist primarily of fund managers and experienced traders, and the language used by Szado, Lisser, and Moran reflected that.
Szado highlighted several of Cboe’s benchmark indices based on the VIX, Cboe’s signature volatility index based on the real-time, mid-quote prices of S&P 500 Index (SPX) call and put options. He said the VIX Premium Strategy Index (VPD), the Cboe Capped VIX Premium Strategy Indexes (VPN), the VIX Strangle Index (VSTG), and several others are useful tools for protecting against downside risk.
To read the rest of this commentary, go here.
What the South Sea Company can teach us
Two books explore historical financial frenzies and the lessons they hold for investors today
John Plender – FT
Financial bubbles are a perennially fascinating phenomenon. Some modern economists, notably of the Chicago variety, deny their very existence, arguing that investors are rational and markets are efficient in the sense that prices accurately reflect all known, relevant information. Others offer refined versions of the irrationality thesis advanced by Charles Mackay in 1841 in his celebrated book Extraordinary Popular Delusions and the Madness of Crowds.
*****The first book I read about the markets, recommended to me when I was a reporter with Commodity News Service, was Charles Mackay’s 1841 book “Extraordinary Popular Delusions and the Madness of Crowds.” I strongly recommend it.~JJL
Covid Is the Big Story on Campus. College Reporters Have the Scoop; University outbreaks are significant contributors to the pandemic. And the campus paper might be the only one left to cover them.
Amelia Nierenberg – NY Times
Before classes had even started at the University of Missouri this August, Eli Hoff, the managing editor of the student newspaper, got a hot tip: A fraternity member had tested positive for the coronavirus.
*****I have great confidence in the college journalists to cover this story.~JJL
How to Worry More Mindfully; It’s possible. Here’s how to cope when stressful thinking seems constant.
Jenny Taitz – NY Times
During times of high-stakes uncertainty, it’s normal to stress about potential threats and negative outcomes, and it can be tougher to resist anxious thoughts given that the coronavirus has disrupted the usual ways we comfort ourselves. But getting lost in worries is emotionally depleting, and it interferes with moving forward. That’s why it’s worth improving how you handle this pesky mental habit.
******Maybe the most important story of the day.~JJL
Tuesday’s Top Three
Our top story Tuesday was Bloomberg’s Ken Griffin’s Macro ‘Dream’ Propels Net Worth to $20 Billion. Second was a repeat from Monday’s top three, Nate Silver’s I’m Here To Remind You That Trump Can Still Win, at FiveThirtyEight. Third was the Bloomberg Opinion piece The Money Says Prepare for a Long Night, and Week. Indeed.