| March 17, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Banks Slam Brakes on Leveraged Loans as Volatility Grips Market
Davide Scigliuzzo and Jeannine Amodeo - Bloomberg
Going into 2022, leveraged loans looked like an easy sell on Wall Street. With the Federal Reserve poised to raise rates, the pitch went, demand for the floating-rate debt could only get stronger.
Yet banks this week have slammed the brakes on even a relatively safe loan sale, as the Fed starts to hike rates and the war in Ukraine boosts inflation worries. Now there's growing risk that banks will struggle to offload the billions of dollars of riskier transactions they have left to sell.
/jlne.ws/3tkbWBA
As liquidity evaporates, oil braces for whiplash volatility
Julia Payne - Reuters
A $40 a barrel rise and fall in oil prices in March pushed many investors to exit the volatile trade and created the conditions for more wild price swings in the weeks ahead, traders, bankers and analysts said.
The Russian invasion of Ukraine has driven many commodity prices to all-time highs, stretching the finances of companies worldwide that trade, process and consume the raw materials. They have had to borrow more from banks to finance their purchases and to meet cash requirements around futures and derivative positions.
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Oil Rises Above $100 as Russia Casts Doubt on Talks With Ukraine
Julia Fanzeres - Bloomberg
Oil advanced above $100 a barrel as Russia cast doubts on the progress of current peace talks with Ukraine and investors weigh the absence of Russian barrels in a tight market.
Futures in New York gained more than 8% on Thursday. Markets rallied after a Kremlin spokesman said a report of major progress in talks over Ukraine was "wrong," but that discussions will continue. The war has severely disrupted Russian oil flows, and the International Energy Agency predicted output from the key OPEC+ member will decline by about a quarter in April. Three cargoes were dropped from Russia's planned March loadings.
/jlne.ws/34QGsK3
Oil Price Outlook: $200 Possible As Russia Supply 'Gone for Good'
Natasha Dailey - Business Insider
Famed French commodities trader Pierre Andurand sees oil prices hitting $200 a barrel this year - about twice the current level â as Russian crude leaves the market for good.
Andurand, who is known for his winning commodities bets in volatile times, told Bloomberg News that oil prices need to hit $200 to reduce demand and "balance the market" as Russia leaves a permanent hole in the supply.
/jlne.ws/3COYbxX
Leveraged Bearish China Bet Dropped 63% After Beijing Vow
Isabelle Lee - Bloomberg
Even on a day packed with extreme moves, this one stood out: A leveraged exchange-traded fund tied to China plunged 63% in Wednesday's dramatic session, recording its steepest intraday drop.
The Direxion Daily FTSE China Bear 3X Shares ETF (ticker YANG), which aims to deliver three-times the inverse of the performance of the FTSE China 50 Index before fees and expenses, plunged amid a broad rally for shares tied to the Asian nation. The FTSE China 50 gauge climbed 14%, the biggest gain since 2008, after Beijing vowed to keep its stock market stable.
/jlne.ws/36wLzzC
Hedge Funds May Be Falling Out of Favor â Again
Hannah Zhang - Institutional Investor
Allocators' interest in hedge funds may be waning. At least that's what they told Preqin before Russia invaded Ukraine, a bloody war that has upended the country and global markets.
According to research and data firm Preqin, only about 10 percent of allocators said they were "more aggressively" investing in hedge funds and accumulating assets as a result of their outlook for equity markets. In November 2020, double the proportion of investors, about 20 percent, were doing the same, up from less than 10 percent the year before.
/jlne.ws/3KYkFzz
| | | | | | Exchanges | | | ASX options and futures market issue resolved
ASX
ASX24 is now fully operational, all contracts are open and ASX is operating as normal. ASX can confirm that the issue was caused by a hardware fault, which has been resolved.
The issue was isolated to ASX24 and did not affect ASX Trade, i.e., the equities trading platform continued to operate normally.
/bit.ly/3sGw54D
LME rips up its free-market rule-book to tame wild metals
Andy Home - Reuters
You can tell the London Metal Exchange (LME) is new to price limits.
The venerable 145-year-old institution's first attempt to restart its broken nickel market was over in chaotic minutes on Wednesday as the price immediately fell to - and briefly through - the lower 5% daily limit at $45,590 per tonne.
Thursday's restart with a widened 8% price band also misfired.
/jlne.ws/3ijEQvr
| | | | | | Technology | | | Cboe Launches The Options Trade Analyzer â Here's What You Should Know
Benzinga
Option volume has surged to record levels in recent years as a growing base of retail traders use calls and puts in a number of trading and investment strategies. Responding to the demand for more tools and resources to assist traders in looking at the markets, Cboe Global Markets Inc. has launched 'The Trade Optimizer' as another vehicle to help provide options traders with a smoother journey.
/jlne.ws/3COpRmG
| | | | | | Strategy | | | Oil prices bubble then implode
John Kemp - Reuters
The recent spike and then crash in oil prices can be explained by a combination of medium-term fundamentals, the extra strain caused by the disruption of Russia's oil exports and a severe lack of liquidity.
Most bubbles are fuelled in their early stages by medium-term fundamentals, then a short-term trigger, before the market's internal dynamics take over and drive the final unsustainable rally and subsequent correction.
/jlne.ws/3wkyHHs
The 'fear index' dips, is this a positive outlook for the stock market?
Jenal Mehta - Capital.com
The past week has seen the VIX drop significantly, although other sentiment indicators suggest that the market may not have stabilised just yet.
The CBOE Volatility Index (VIX), and indicator of expected volatility of the S&P 500 (US500), fell by 20% in the past week. VIX is regarded as a sentiment indicator of the broader market and often refered to as "the fear index". Its decline this week indicates increased market confidence.
/jlne.ws/3KSci8n
| | | | | | Miscellaneous | | | Wall Street's Talent War May Continue Despite Slowdown in Deals, Jefferies Says
Dinesh Nair, Katherine Griffiths and Harry Wilson - Bloomberg
Jefferies Financial Group Inc. expects Wall Street's fierce battle for talent to continue even as the red-hot streak in global dealmaking begins to cool.
"There is still tremendous demand for good talent in investment banking," Dominic Lester, European head of investment banking at Jefferies, said in an interview. "This year's market slowdown hasn't had a material impact on that."
/jlne.ws/3wgBFfZ
Podcast: When ETFs Stop Working
Joel Weber and Eric Balchunas - Bloomberg
ETFs are like cockroachesâthey can trade through almost anything. And yet Russia's invasion of Ukraine has presented a rare test. The VanEck Russia ETF, or $RSX, has seen its trading halted; the product holds shares of Russian companies, many of them in the energy and financial sectors. Investors may end up recovering only a fraction of their exposures; retail traders who used options to short the ETF ahead of its mid-February nosedive may not be able to collect their winnings, either. Elsewhere in the world, the exchange-traded product $VXX went haywire recently, with Barclays temporarily suspending share issuance. What's happening here? And where does this leave investors?
/jlne.ws/36bHiBw
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| | | Jeff Bergstrom
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