Observations & Insight
MarketsWiki Education World of Opportunity 2020 Virtual Event Announced
John Lothian News is pleased to announce a 2020 virtual event for the MarketsWiki Education World of Opportunity series. The one-day event will be held on Wednesday, July 22 from 1:30 to 3:30 PM CDT.
The online only event is FREE to registered participants. Click HERE to register.
The lineup of speakers includes PEAK6 Founder Jenny Just, Greenwood Project Co-Founder Bevon Joseph, Chicago Federal Reserve Vice President Alessandro Cocco, OCC Vice President of Talent Acquisition Andre Buckles, and author, former regulator and lawyer Eileen Flaherty
Just will address why she has stayed in the fintech industry for over 25 years and how challenging the status quo makes her company better.Joseph will talk about the effort in the Chicago financial markets to bring racial equality to the industry through an innovative intern program for inner city youth. Cocco will speak about “Will climate change impact your career in finance?” Buckles will talk about how the pandemic will change the job markets and Flaherty will talk about her career and the novel about to be published that is based on it.
The World of Opportunity series is aimed at interns, college students, new employees or anyone who is interested in a career in the financial markets. Our goal is to educate and inspire the next generation of industry professionals through insightful presentations by industry leaders.
For the rest of the announcement, click HERE.
US volatility indices show persistent investor ‘fear’ after rally
Colby Smith and Eric Platt – Financial Times
Investors are betting on big swings in US stock prices, even as benchmark equity indices push steadily higher and darlings like Tesla and Amazon surge to new records.
The Cboe’s Vix index of equity market volatility, often referred to as Wall Street’s fear gauge, remains 41 per cent above its historic average at nearly 28. Another longer-term measure of US stock volatility is 50 per cent above its long-term average, according to the Cboe.
Wall Street Fears Market Fragility in $23 Trillion Stock Frenzy
Justina Lee – Bloomberg
It’s not your imagination: Stock markets are lurching from meltdown to melt-up like never before.
After one of the swiftest corrections in history, the S&P 500 is now back within a spitting distance of pre-crisis levels. Likewise the February 2018 crash was followed by a swift resurgence, while the late December swoon that year was a mere memory the following April.
The surge from the March lows masks how volatile stock markets still are
Steve Goldstein – MarketWatch
Tuesday broke a remarkable run of five straight gains of at least 0.5% by the S&P 500.
How remarkable? Michael Batnick, director of research at Ritholtz Wealth Management, calculates that it is a roughly once-in-2,000-days likelihood, given that the S&P 500 has gained at least 0.5% about 28% of the time, going back to 1993.
The other times this happened was 2011, 2009, 2008 and twice in 1999 — all periods of above-average volatility.
Wells Fargo’s Anna Han on Market Volatility
Anna Han, equity strategist at Wells Fargo Securities, discusses market volatility amid the coronavirus pandemic June 12 on “Bloomberg Markets.”
NY Fed’s Singh says emergency facilities helped markets despite low usage
Jonnelle Marte – Reuters
The Federal Reserve’s emergency lending facilities helped stabilize markets after anxiety over the coronavirus sparked volatility in March, and the central bank stands ready to adjust its approach if necessary, a senior official at the New York Fed said on Wednesday.
While some of the programs the Fed set up to help keep credit flowing to households and businesses had low usage, the backstops still helped to improve market functioning, said Daleep Singh, head of the markets group at the New York Fed.
Chinese Stock Market Call Options Go Through The Roof
Gavin McMaster – Investors.com
The Chinese stock market was on fire Monday and there are a number of ways for U.S. investors to profit. One could use leading stocks such as Alibaba (BABA) and JD.com (JD) to gain exposure to the Chinese stock market. As always, there is the single-stock risk that something can happen to that particular company. A way to gain broad-based exposure to the Chinese stock market is via the iShares China Large Cap ETF (FXI). This ETF was up 9.5% Monday in a monster move.
Exchanges and Clearing
Flow Traders appointed lead liquidity provider for new HKEX MSCI derivatives; HKEX confirmed in May it would expand its licensing agreement with MSCI to launch Asia and emerging market futures and options contracts.
Hayley McDowell – The Trade
Market maker Flow Traders has confirmed it has been appointed Tier 1 lead liquidity provider for Hong Kong Exchanges & Clearing’s (HKEX) new suite of MSCI-based derivatives. HKEX has received approval for 33 new contracts from Hong Kong’s Securities and Futures Commission, with plans to launch the derivates in phases throughout July and August. Flow Traders will make a market in 26 of those contracts during the T session in Hong Kong, and in 14 more contracts during the T+1 session.
Miami International Holdings Completes Equity Investment in MidChains’ Parent Holding Company
Miami International Holdings Inc. (press release)
Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options, MIAX PEARL and MIAX Emerald options exchanges (the MIAX Exchange Group), today announced the completion of a minority equity investment in MEEG Holdings Limited, the parent holding company of MidChains, an upcoming digital asset trading exchange. The parties have also agreed to pursue joint technology licensing and product listing opportunities internationally.
June monthly figures at Eurex and EEX
The OTC Clearing business at Eurex enjoyed a very positive June, while the picture was more mixed across derivatives trading, repo, and commodities at EEX. Notional outstanding volumes in OTC Clearing climbed over 69% in June compared to the same month last year, while average daily cleared volumes grew over 57% across the same period. Average daily cleared volumes in just interest rate swaps grew from 13 million EUR in June 2019 to 21 million last month – a rise of over 56%.
SGX reports market statistics for June 2020
Singapore Exchange (SGX) today released its market statistics for June 2020. Global financial and commodity markets reflected optimism from the reopening of major economies, even as concern that new COVID-19 infections could stymie growth continued to drive demand for risk management.
TriOptima Extends Collaboration with DTCC to Meet Client Securities Financing Transactions Reconciliation Needs
TriOptima, a leading infrastructure service that helps to lower costs and to mitigate risk in OTC derivatives markets, has extended data connectivity between The Depository Trust & Clearing Corporation (DTCC) Global Trade Repository (GTR) service and TriOptima’s triResolve platform to help market participants validate their reported securities financing transactions as they prepare for Securities Financing Transactions Regulation (SFTR) compliance.
WallachBeth Enhances Electronic Trading Offering with Option Algo Suite
WallachBeth Capital, a leading provider of institutional execution services, announced today the further expansion of its electronic trading offering with the addition of a robust algorithmic options trading suite. Institutional clients can now leverage the firm’s sophisticated tools for electronic options trading, customizing the offering to their individual needs and objectives.
Goldman Warns Investors to Hedge for U.S. Elections Delay
Joanna Ossinger – Bloomberg
Goldman Sachs is telling investors to prepare for volatility around the November U.S. election, as the coronavirus adds a “major complication” to tabulating results, with a recommendation to extend hedges out to December expirations.
“Delayed primary results, a precedent for extended vote-counting, and a slightly inverted term structure lead us to prefer December hedges to November hedges,” strategists led by David Kostin wrote in a note dated July 7. “Given the several-week delay in finalizing the results of the 2000 presidential election (in addition to the contentious 1876 election), the elevated volumes of mail-in ballots used in recent primary elections, and potential for increased mail in ballots this November, we see heightened risk that election-related volatility could extend beyond Election Day.”
This fascinating chart shows the link between commodity prices and populism
Steve Goldstein – MarketWatch
It’s not an uncommon opinion that the combination of superlow interest rates and bond buying by central banks with aggressive fiscal spending will lead to a surge in inflation.
Barry Bannister, head of institutional equity strategy at Stifel, won’t disagree but thinks it will take decades to play out. He expects the combination to end in tears — in the early 2040s.
Bannister recently shared this fascinating chart.