Observations & Insight
FIA’s International Derivatives Expo is returning to The Brewery in London this coming 6-8 June. Standing still is not an option in today’s evolving cleared derivatives environment. Without adapting to new products, processes, technologies and regulations, your business won’t meet the needs of tomorrow’s industry. We’re bringing together industry leaders, vendors and policymakers to discuss what’s “now” in derivatives, and what lies ahead. Sign up here.
Wall Street stocks steady after heaviest sell-off since 2020
Ian Johnston, Kate Duguid and Hudson Lockett – Financial Times
US stocks steadied on Thursday after the worst sell-off since the early days of the coronavirus pandemic as investors navigate a tricky outlook for global equities marred by inflation and signs of slowing growth.
The tech-heavy Nasdaq Composite gained 0.3 per cent, while the S&P 500 was modestly lower on the day, down 0.3 per cent. Both gauges had come under heavy selling pressure in the previous session, with the S&P shedding 4 per cent in the worst sell-off since June 2020 and the Nasdaq tumbling 4.7 per cent.
Global Economy Loses $1.6 Trillion as World Struggles to Avoid a New Cold War
Maeva Cousin, Tom Orlik, and Bryce Baschuk – Bloomberg
The ties that bind the global economy together, and delivered goods in abundance across the world, are unravelling at a frightening pace.
Russia’s invasion of Ukraine and China’s Covid Zero lockdowns are disrupting supply chains, hammering growth and pushing inflation to forty-year highs. They’re the chief reasons why Bloomberg Economics has lopped $1.6 trillion off its forecast for global GDP in 2022.
Cratering Markets Blowing a Bigger Hole in Consumer Psychology
Vildana Hajric – Bloomberg
The pros are buried in it. But how deeply is the falling market burrowing into consumer psyches? It’s an urgent question for policy makers trying to subdue inflation while guiding the economy to a soft landing.
University researchers Marco Di Maggio, Amir Kermani and Kaveh Majlesi have one way to quantify it. Their 2020 study says every dollar lost in stocks leads to a 3-cent reduction in spending. After the five-month selloff, that’s about $300 billion zapped this year. Americans have about $18.5 trillion in annual disposable income, strategists at Bloomberg Intelligence say.
Mohamed El-Erian says the stock sell-off is in a new phase, as investors add earnings and growth fears to Fed worries
Hamza Fareed Malik – Business Insider
The economist said earnings and growth concerns were being added to fears around Fed interest-rate hikes.The Dow Jones fell more than 1,100 points Wednesday after an earnings miss from Target spurred worries about a recession.
An Options Strategy Tailor-Made for a Tough Market
Steven M. Sears – Barron’s
The maladies that are confronting investors seem to be growing as each day passes.
The incredible array of demons includes inflation, stagflation, a potential recession, rising interest rates, the expiration of the so-called Fed put that has long supported stocks, the negative correlation of stocks to inflation concerns, and an overwhelming sense that we might be haunted by Paul Volcker’s ghost.
Alternative Investments That Can Help Your Portfolio Navigate Choppy Markets
Evie Liu – Barron’s
This week’s stock volatility is the latest reminder that it’s time to revisit risks in your investment portfolio. Besides the traditional ways of reducing risk—shifting money from stocks to bonds and owning the more defensive options in each asset class—there are some alternative strategies that help investors navigate choppy waters.
Tactical-allocation exchange-traded funds move away from riskier assets when markets turn south; managed-futures ETFs try to bet against and profit from falling assets; while buffer ETFs use options to limit their losses at the cost of potential gains.
Opinion: Stay bearish on stocks — and watch the trend rather than trying to pick the market bottom
Lawrence G. McMillan – MarketWatch
This past week, the stock market fell again. The bulls tried to engineer another rally attempt but once again, it was thrown back in their face, as the bears pushed the S&P 500 index to new relative closing lows (although the intraday low was set on May 12).
This is the third strong rally attempt since April 28 that has quickly failed. The bears have been relentless in their efforts to sell into rallies. Thus, the downtrend in the S&P remains intact, as lower highs and lower lows continue to appear on the chart.
Oil swings wildly, rebounding to gains after steep losses
David Gaffen – Reuters
Oil prices rebounded from earlier losses in another volatile session on Thursday as Chinese officials planned to ease restrictions in Shanghai, which could further tighten global energy supply, and as the dollar retreated from recent gains.
Crude benchmarks continued their spate of wild swings, with both Brent and U.S. crude rising by nearly $5 a barrel in the span of a few hours, recovering from losses earlier in the week.
Your Dog Is Not Ready for You to Return to the Office; Pets (and their owners) prepare for the inevitable.
John Leland – NY Times
Look at that face, those pleading eyes, that nose that kept you company all through the pandemic. Now explain to Cooper why it is so, so important that you return to the office — leaving her alone all day, after two years of 24/7 togetherness. Because … what? Company d’esprit? Todd McCormick, a derivatives trader on Manhattan’s Upper West Side, decided that he was not going to do it. “I don’t believe I will ever go back to an office,” he said. As he spoke, his 13-year-old rescue mix, Higgins, demanded a cracker. Many New Yorkers, of course, have long since returned to their workplaces, or never stopped going to them. But for those contemplating the transition now, and for their dogs, a day of reckoning has arrived.