| July 19, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Could VIX-Yield Curve Cycle Predict Next Recession?
CME Group - Benzinga
It's been five years since we published the first article on the "weirdest chart ever," which shows the cyclical relationship between implied volatility on equity index options (represented by the VIX index) and the yield curve. Now, Anne Lundgaard Hansen of the Federal Reserve Bank of Richmond has published the first ever academic study on the VIX-yield curve cycle concluding the following:
"The proposed indicator significantly outperforms the yield-curve spread in predicting U.S. recessions from 1990 - 2021 both in- and out-of-sample using both static and dynamic probit models. VIX-yield-curve cycles also contain predictive power above and beyond other leading economic indicators." Here's the link to her paper: Predicting Recessions Using VIX-Yield-Curve Cycles
/jlne.ws/3ckKVb7
Deserted Stock Market Shows It Can Swerve Any Way at Any Time
Lu Wang - Bloomberg
A yearlong rush to the exits by institutional investors has left the stock market's foundation delicate and given to quick swings.
More evidence came at around 1 p.m. in New York Monday, when what looked like a second straight green day for the S&P 500 fell apart in minutes. While news Apple Inc. will slow hiring was cited as a culprit in the collapse, such swings have become common in 2022 equities.
/jlne.ws/3PkNF76
Short Sellers Wind Down Pot Stock Bets as US Congress Mulls Action
Stefanie Marotta - Bloomberg
Cannabis short sellers are ratcheting down their bets that the beleaguered sector will continue its slide.
Short interest in pot stocks has tumbled to $632 million from $3.14 billion in May 2021, even as share prices plunged in the past year, according to data from S3 Partners. While analysts are skeptical that the federal government will approve a legal weed market soon, Congress is set to consider some cannabis legislation, which could lead to a rally in the sector.
/jlne.ws/3yRNI3b
It's Premature to Say Peak Inflation Is Close: Goldman's Stock Chief
Zahra Tayeb - Markets Insider
It's too early to decide that red-hot US inflation is close to a peak that could prompt the Federal Reserve to pivot away from tightening, according to Goldman Sachs' chief global equity strategist.
Speaking to Bloomberg TV on Monday, Peter Oppenheimer said: "It's premature to believe inflation is going to come down quickly, or the pressure has eased for the Federal Reserve and other central banks to continue to tighten."
/jlne.ws/3ocHSV9
Market Risk vs. Volatility: 3 Key Differences
Alex Bova - J.P. Morgan Wealth Management
Market risk and volatility are two important concepts for investors and traders in financial markets. Most individual investors will likely be invested in the stock market and bond market. Traders may trade in stocks, bonds, commodities, options and futures contracts. All markets for financial securities are subject to both volatility and market risk.
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| | | | | | Exchanges | | | FIA publishes whitepaper on role of clearing firms in futures markets
FIA
FIA has published a whitepaper on the role of clearing firms in futures markets as a resource to help public sector stakeholders better understand how these important intermediaries support safe and efficient capital markets.
In futures markets, as in most financial markets, there are several types of intermediaries that provide customers with access to the markets and a range of services related to their trading activity. In futures markets, however, there is one type of intermediary that is especially important. This is the clearing firm, which functions as the intermediary between the customers and the exchanges and clearinghouses.
/jlne.ws/3yS5qDR
| | | | | | Regulation & Enforcement | | | CFTC Extends Public Comment Period on Request for Information on Climate-Related Financial Risk
CFTC
The Commodity Futures Trading Commission is extending the deadline for the public comment period on a Request for Information on Climate-Related Financial Risk (RFI) to October 7. "It's critical that the Commission proactively understand how climate-related financial risk may affect the commodities and derivatives markets as well as our registered entities, registrants, and other market participants as they increasingly rely on the derivatives markets to manage their climate-change induced physical and transition risk," said Chairman Rostin Behnam. "I look forward to feedback from all corners of the derivatives markets, especially the farmers, ranchers, producers, and other end-users who will be on the front lines of the effects of climate change."
/jlne.ws/3cdEw1m
CFFEX: Notice On The Reporting Of Trading Information On Equity Index Options Contracts
Mondovisione
To regulate the trading of equity index options contracts, maintain orderly market operations, and protect the legitimate rights and interests of market participants, China Financial Futures Exchange (the "Exchange") hereby announces the following requirements on the reporting of trading information, which shall come into effect from July 22, 2022.
/jlne.ws/3PEeEuc
| | | | | | Strategy | | | Crude Oil Price Holds Above $100 as Traders Weigh Tight Market, OPEC+ Plans
Julia Fanzeres and Devika Krishna Kumar - Bloomberg
Oil regained ground as a rally in equity markets and a weaker dollar boosted risk-on sentiment as thin liquidity makes crude more susceptible to broader moves.
West Texas Intermediate recovered after losing almost 3% to trade above $104 a barrel on Tuesday. Broader markets continue to drive crude prices as liquidity has been limited since prices spiked following Russia's invasion of Ukraine. Despite fluctuations in futures markets, crude barrels continue fetching huge premiums, suggesting tight supply. A disruption along the Keystone pipeline cut shipments of some Canadian oil to US refiners has exacerbated the tightness.
/jlne.ws/3yURxoe
| | | | | | Education | | | Options Investing Explained
Brian O'Connell - InvestorPlace
Options have long had a mystique about them. Many investors are fascinated by them and the possibilities they offer.
But those same investors also are often confused, afraid, and intimidated by options.
That's understandable. It takes some work to understand and become more familiar with options. But when used appropriately in the context of an overall investment strategy, they can be worth it.
/jlne.ws/3yRoToa
| | | | | | Miscellaneous | | | Takeaways From Bankman-Fried Remarks at Crypto Summit: TOPLive
Olga Kharif - Bloomberg
Here are the key takeaways from FTX founder and CEO Sam Bankman-Fried's remarks at the Bloomberg Crypto Summit in New York Tuesday.
/jlne.ws/3IMWMuR
How 2020 Set the Stage for the 2021 Bitcoin Bubble
Amy Castor and David Gerard - TABB Forum
The meteoric rise of Bitcoin at the onslaught of the pandemic, and subsequent equally steep decline, has a number of twists and turns. There is much to unpack in this story, as Bitcoin peaked at $64,000 in April 2021 and again at $69,000 in November 2021. Many of the network effects that drove the price of bitcoin to those heights were put into place in 2020, write independent journalists Amy Castor and David Gerard.
We often get asked by reporters: "Why are crypto markets crashing?" The short answer is because there's no money left, and no more coming in. The long answer is more complicated.
/jlne.ws/3aXqz7o
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
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| | | Jeff Bergstrom
Editor
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