| July 26, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Diversification Isn't Enough To Hold Down Market Risk
Larry Light - Forbes
Spreading your assets over different classes of stock and bonds, as well as alternative investments such as real estate and commodities, is supposed to buffer you against market risk. Lately, though, we've seen both stocks and bonds take a hit, which is very unusual. Michael Oyster, chief investment officer of Options Solutions in Chicago, has a better answer.
/jlne.ws/3cCGbhf
Booming ETFs That Worry Wall Street Watchdogs Rake In Billions
Katie Greifeld and Emily Graffeo - Bloomberg
Traders are splurging billions of dollars on "complex" ETFs to ride out the crushing bear market across assets -- just as Wall Street watchdogs threaten intrusive measures to limit retail participation. Issuers including ProShares Advisors LLC, Direxion and Innovator ETFs have been flooded with nearly $24 billion of inflows this year into these typically derivatives-powered exchange-traded funds. Investors are navigating the crash in everything from stocks and crypto to fixed income by using the ETFs to bet on more pain or to nab outsize returns during market rebounds.
/jlne.ws/3PW19pC
Should I Buy Single-Stock ETFs? Retail Traders Make Big Bets With Big Risks
Claire Ballentine - Bloomberg
Retail traders just got a new tool to make bigger bets on their favorite stocks, but advisers are warning about outsized risks.
The first single-stock exchange-traded funds earlier this month, providing an easy way to magnify returns or bet against volatile companies like Tesla Inc. and Nvidia Corp. Unlike typical ETFs, which include dozens of stocks or bonds, these new products concentrate on just one security.
/jlne.ws/3vdx10X
A Fed Rate-Hike Surprise Could Be a Problem for Stocks
Nicholas Jasinski - Barron's
It's Fed meeting week, and the market doesn't exactly know what's going to happen. After a last-minute pivot in June and with recent economic data coming in mixed, the discussion among investors and economists is all about what the central bank's next move will be.
The latest inflation reading for June showed a 1.3% rise in the consumer price index during the month, stretching its one-year increase to a whopping 9.1%. The Federal Reserve continues to play catch up in its fight against inflation, and there's no doubt that interest rates are going higher after the Federal Open Market Committee's two-day meeting concludes on Wednesday. The debate is over the size of the move.
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Recession Won't Hit Stock Market
Matthew Fox - Markets Insider
The odds of an economic recession in the US are on the rise as recent PMI data shows a decline in business activity, jobless claims begin to rise, and the housing market slows amid high mortgage rates, JPMorgan's Marko Kolanovic said in a Monday note.
But investors shouldn't fret because the S&P 500's year-to-date decline of as much as 24%, combined with negative earnings revisions and a shift in rates markets, means the stock market has fully priced in a mild recession, according to the note.
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| | | | | | Exchanges | | | Matrix Executions Achieves Record Equity Options Volumes; Growth Predicated on Sustained Client Focus
Matrix Executions, LLC
Matrix Executions, LLC ("Matrix"), a broker-dealer specializing in trading workflow automation for options markets, today announced record 2022 Q1 and Q2 volume in their low-touch options execution business, along with an enhanced offering of specialized execution algos. In the first half of 2022, Matrix achieved: An all-time high in option volume and market share in Q2, in June, and in the first half of 2022; A 138% increase in options volume compared to 2021 H1; and More than double its 2021 options market share.
/jlne.ws/3S2c6YQ
The battle for Euronext's clearing: a tale of two CCPs; Following the exchange's decision to migrate its clearing operations, LCH SA and EuroCCP are lacing up for battle. The question is, who will be preferred?
Annabel Smith - The Trade
The race to be Euronext's preferred clearing counterparty is hotting up, with two main contenders EuroCCP and LCH SA, LSEG's Paris based clearing arm, preparing for war. Euronext moved to break off its 10-year deal - originally due to expire in 2027 - with LCH SA in November after announcing its plans to move its clearing operations to Italy. The move followed its acquisition of Borsa Italiana and the bourse's clearing house CC&G - now rebranded to Euronext Clearing.
/jlne.ws/3vcHKsv
| | | | | | Regulation & Enforcement | | | Former Goldman Sachs Banker Charged in Insider-Trading Scheme; Brijesh Goel is one of nine defendants charged by Manhattan federal prosecutors in four insider-trading cases
James Fanelli and Corinne Ramey - WSJ
A former Goldman Sachs Group Inc. vice president was charged in an insider-trading scheme in which he allegedly profited by tipping off a close friend to confidential information about coming mergers and acquisitions connected to the bank. Federal prosecutors accused Brijesh Goel of relaying information from internal Goldman communications about potential takeovers the firm was considering financing. Mr. Goel's friend traded on the tips, typically using a relative's brokerage account to buy call options that would become profitable if the stock price of a company targeted for acquisition rose, according to an indictment.
/jlne.ws/3OzfmI6
The CFTC Changes the SWAP Reporting Rules
George Bollenbacher - TABB Forum
The CFTC is in the process of requiring some significant changes in swaps reporting. Market structure analyst George Bollenbacher offers his analysis into the changes and how they will impact market participants. As Mr. Bollenbacher explains, swaps reporting has been a "bumpy road" for investors, so market participants will see in due time "whether these voluminous changes by the CFTC fill in the potholes or simply move them."
/jlne.ws/3zzP0Bu
| | | | | | Moves | | | OCC Names ABN AMRO Clearing Executive Mike Nowak as Chief Financial Officer
OCC
OCC, the world's largest equity derivatives clearing organization, today announced its Board of Directors elected Mike Nowak as Chief Financial Officer and a member of OCC's Management Committee, effective August 8. As CFO, Nowak will oversee all of OCC's Corporate Finance functions, including treasury, finance, accounting, strategic sourcing, as well as facilities and vendor management. To help ensure a smooth transition, Nowak will work closely with outgoing CFO Amy Shelly, who is leaving OCC to pursue a new opportunity.
/jlne.ws/3PEkonV
| | | | | | Strategy | | | This latest rally is full of 'wishful thinking' and stocks have further to fall as the Fed fights inflation, Morgan Stanley says
George Glover - Business Insider
The bank expects the Federal Reserve to continue tightening monetary policy until inflation drops.Morgan Stanley Wealth Management's Lisa Shalett expects July's bear market rally to fizzle out soon.
Investors should brace for further Federal Reserve hawkishness that will likely cause July's stock market rebound to fizzle out, according to Morgan Stanley Wealth Management.
/jlne.ws/3zg5Rbk
Dividend Stocks Starting To Lose Their Luster
Mike Zaccardi - Investing.com
Volatility has pulled back recently with the VIX inching down to near the 20 level. Still, daily swings have been bigger than normal this yearâ2022 is pacing to be the year with the fifth highest average VIX level since 1990, according to data from Seth Golden. Expect volatility to continue to be elevated through this uncertain earnings season and ahead of the U.S. mid-term elections. History shows that significant S&P 500 dips can happen during the third quarter of year two of the election cycle.
/jlne.ws/3vgUfn5
| | | | | | Miscellaneous | | | ETFs Put to Test Theory That Stocks Perform Better Overnight
Paulo Trevisani - MarketWatch
A couple of new exchange traded funds are offering to individual investors a chance to capture the so-called night effect, a strategy that academic research indicates could be a winner in the long run, but that remains largely untested.
AlphaTrAI Funds Inc.'s NightShares 500 ETF, ticker NSPY, and the NightShares 2000 ETF, NIWM were launched June 28 to capture the off-hours trade. Both funds buy their positions right before 4pm Eastern Time and sell them right after 9am the next trading session, sitting on cash during the daylight session.
As regular ETFs, though, investors can trade them when stock markets are open.
/jlne.ws/3zzEn1F
Brad Pitt Pays $40 Million for Circa-1918 Coastal California Home
WSJ
Actor Brad Pitt has paid $40 million for a roughly century-old home on a bluff in the Carmel Highlands along California's central coast, according to public records and people familiar with the deal.
Local agents said the sale is one of the priciest ever closed in the Carmel area.
/jlne.ws/3PAXmyd
**** JB: This is in the newsletter because the property was formerly owned by Joe Ritchie. "A legendary Chicago options trader and founder of the private investment group Fox River Partners, Mr. Ritchie died earlier this year."
Put short selling on the ESG investing table, say hedge fund managers
Jean Dondo - Wealth Professional
Investors engaged in accomplishing environmental, social, and governance objectives have favoured shareholder activism and divestment as their preferred strategy. However, it may also be beneficial to take short positions on businesses that violate ESG regulations.
James Jampel, founder of the US$700-million hedge fund HITE Asset Management, argues that shorting can be a powerful tool in helping reduce carbon emissions across the economy, reported Institutional Investor. Since it permits investors to avoid the conflict of interest that results from keeping long positions in ESG laggard businesses, it may even be more effective than shareholder participation.
/jlne.ws/3BdJjKO
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