| August 26, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
Otto Nageli - History of Financial Futures Part One: From SOFFEX to Eurex
JohnLothianNews.com
Otto Nageli, a longtime futures and options executive, died on May 5, 2022. JLN interviewed him in May of 2019 for the History of Financial Futures video series.
In Part One, Nageli talked about getting his start at Credit Suisse, where he became the youngest branch manager the company ever had. He later got an offer to become a member of the executive management of the Bank of Tokyo in Zurich. Later he got a call asking him if he wanted to become the CEO of the first-ever fully electronic exchange and clearing house. He said yes, and he took over as the CEO of SOFFEX, which was launched in 1988, a year after the "Black Monday" stock market crash.
Watch the video »
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Otto Nageli - The History of Financial Futures - Part Two: The Battle of the Bund; Burgenstock
JohnLothianNews.com
In Part Two of the late Otto Nageli's interview with JLN for the History of Financial Futures series, Nageli talked about the part DTB, the forerunner of Eurex, played in repatriating the bund contract and the establishment of Eurex.
Nageli said German regulators considered futures and options to be gambling back then. "That was the main issue for the banks," he said. "They had no legal environment that would be fit for creating a derivative market. But they insisted they needed a futures contract on the bund."
Watch the video »
| | | | | | Lead Stories | | | Large Ether Traders Position for Volatility Spike as Merge Draws Near
Omkar Godbole - CoinDesk
Taking unhedged or hedged directional bets on an asset's price is seen by some as the most exciting trading strategy in financial markets. And ether (ETH) traders have been doing exactly that ahead of the impending upgrade, known as the Merge, of the cryptocurrency's parent blockchain, Ethereum.
Institutions seems to be adopting an options trading strategy called a long strangle, which is indifferent to the direction in which the cryptocurrency moves and instead aims to make a profit from the degree of price turbulence or volatility.
/jlne.ws/3RdJzy9
Dow drops almost 800 points, Nasdaq down more than 3% after Powell warns of pain to households in inflation battle
Christine Idzelis and Joseph Adinolfi - MarketWatch
U.S. stocks tumbled Friday afternoon after Federal Reserve Jerome Powell said the central bank will continue its battle against inflation "until the job is done" of getting the cost of living back to its 2% target.
/jlne.ws/3e2ZS2g
Inflation Will Keep Driving Markets Lower, Amundi's Blanque Says
Libby Cherry - Bloomberg
The Western world can expect to live with inflation running between 4% and 5% for years, and sharply lower asset prices as a result, according to Pascal Blanque, chairman of the Amundi Institute.
The new environment comes as policy makers balk at the risks to growth needed to quash decades-high price growth, said Blanque, a former chief investment officer of Amundi SA. Central banks will end up prioritizing nominal growth and "tolerating" higher inflation with relatively low real-interest rates, he said.
/jlne.ws/3e0BBKg
Fed's Preferred Inflation Gauge Slowed Down
Sabrina Escobar - Barron's
Core PCE, the Federal Reserve's preferred inflation metric, cooled off in July, rising 0.1% on a monthly basis and pushing prices up by 4.6% from a year earlier.
Economists surveyed by FactSet expected the core personal consumption expenditures index to rise 0.3% on a monthly basis and 4.7% on a yearly basis. The result was far below June's 0.6% increase, which pushed the index up 4.8% year over year, but it is unlikely to be enough to dissuade the central bank from continuing to raise interest rates.
/jlne.ws/3e2gis1
Oil Set for Weekly Gain as Saudi Warning Lingers Over Market
Julia Fanzeres and Alex Longley - Bloomberg
Oil is on track for a weekly gain with Saudi Arabia's warning that supply cuts may be warranted providing support against other more bearish indicators.
West Texas Intermediate fluctuated near $92 a barrel. Federal Reserve Chair Jerome Powell signaled the US central bank is likely to keep raising interest rates to stamp out inflation, which is seen as potentially hurting oil demand. Still, prices are on track for a weekly gain following an earlier rally sparked by Saudi comments flagging potential cuts to OPEC+ output to stabilize a volatile market.
/jlne.ws/3Kqyqrv
OPEC+ Creates Its Own Volatility: Elements by Liam Denning
Liam Denning - Bloomberg
It seems odd that Saudi Arabia's energy minister professes concern about volatility; that just goes with the job title, surely? Also, oil-price volatility has actually eased from the heights reached earlier this year â sparked by the brutality of Saudi Arabia's main OPEC+ partner, Russia.
/jlne.ws/3Rcg3sG
Stocks Have Been Less Volatile. Jackson Hole Could Change That.
Jacob Sonenshine - Barron's
This summer has featured a quiet stock market. It's about to get noisier as the Federal Reserve's Jackson Hole Symposium continues.
The S&P 500 has risen about 14% from its lowest close of the year in mid June, marking a fairly smooth ascent. Volatilityâthe magnitude of swings in prices around their recent averagesâhas trended downward. In the past month, the CBOE Volatility Index has dropped more than 3% to a reading of about 22.
/jlne.ws/3AucKGe
How the Stock Market Performs After Jackson Hole, According to History
Jacob Sonenshine - Barron's
The stock market usually performs well just after the Federal Reserve's annual Jackson Hole Symposium.
The first day of the Jackson Hole meeting usually kick-starts strong stock market performance in the near-term, historically speaking. The average move for the Dow Jones Industrial Average for the month following the first day of the meeting is up 0.3%, in data dating back to 1978, according to Dow Jones Market data. The S&P 500 averages a 0.5% gain, while the more volatile Nasdaq Composite averages a 0.9% rise.
There are, however, two caveats.
/jlne.ws/3CFeBLr
'Big Short' investor Michael Burry says the US government is backstopping markets and the economy - and warns too much fiscal support will end in disaster
Theron Mohamed - Business Insider
The "Big Short" investor compared excessive fiscal support to giving sugar to babies.Burry expects declines in consumer spending, economic growth, and inflation in the coming months.
Michael Burry called out the US government for backstopping financial markets and the economy, warning that too much stimulus would ultimately lead to a devastating downturn.
/jlne.ws/3AQljwz
| | | | | | Exchanges | | | Cboe Is Teaming With Virtu, Jane Street to Build Crypto Business
Katherine Doherty - Bloomberg
Cboe Global Markets Inc. is partnering with financial firms including market makers DRW, Jane Street and Virtu Financial Inc. as it builds out its crypto business. The Chicago-based exchange operator said it's in "advanced discussions" with potential equity partners including B2C2, Hidden Road, Interactive Brokers Group Inc. and Jump Crypto, according to a statement Thursday. Terms of the equity partnership, which is expected to be finalized in coming weeks, weren't disclosed.
/jlne.ws/3ReXMej
Launch Date of Nikkei 225 micro Futures and Nikkei 225 mini Options
JPX
Osaka Exchange, Inc. (OSE) announced that OSE was aiming to launch Nikkei 225 micro Futures and Nikkei 225 mini Options in the second quarter of 2023 in response to strong investor demand. We today announce that the implementation date has now been set to May 29, 2023 (Mon.).
/bit.ly/3clBDMn
| | | | | | Regulation & Enforcement | | | In the SEC's Long Range Plan: Crypto and Machine Learning
Bill Alpert - Barron's
The U.S. Securities and Exchange Commission published its strategic plan for the next four years, and it wants your input.
Novelties like cryptocurrency and computerized markets provoke debate about the SEC's role. Should it apply long-standing rules and police these new things, or will that stifle innovation? The strategy draft suggests that the SEC wants to stay on top of evolving finance. Some in Congress or industry may disagree.
/jlne.ws/3wyK1yV
| | | | | | Technology | | | Davy Selects Torstone's Platform To Further Enhance Post-Trade Capabilities
Mondo Visione
Torstone Technology, a leading global SaaS platform provider for post-trade securities, derivatives processing, announced today that Davy Capital Markets, Ireland's leading capital markets firm and a member of the Bank of Ireland Group, has entered into an agreement to utilise the Torstone Platform for its post-trade processing. The Torstone Platform is a multi-asset, multi-entity, cloud-based solution, covering electronic trade capture, allocation, confirmation, settlement, accounting, corporate actions, reconciliation and regulatory reporting. The platform provides a comprehensive, flexible user experience for middle- and back-office staff, increasing automated straight-through processing (STP) and achieving greater operational efficiency for clients reducing manual effort.
/jlne.ws/3dYXBp5
| | | | | | Strategy | | | BlackRock's new fixed-income ETFs use an options strategy â here's how they could pay off as investors focus on Fed rate hikes, says its U.S. head of bond ETFs
Christine Idzelis - MarketWatch
BlackRock this week launched a trio of bond-focused exchanged-traded funds that are designed to give investors an additional stream of cash flow tied to the options market.
The new ETFs â the iShares 20+ Year Treasury Bond BuyWrite Strategy ETF TLTW , iShares High Yield Corporate Bond BuyWrite Strategy ETF HYGW and iShares Investment Grade Corporate Bond BuyWrite Strategy ETF LQDW â are the first of their kind in fixed income, according to Stephen Laipply, U.S. head of bond ETFs at BlackRock.
Each fund is set up to provide two income streams, one from the yields from the underlying ETF plus a premium collected from selling monthly call options on it.
/jlne.ws/3TkH12V
| | | | | | Miscellaneous | | | She's a Self-Made Billionaire, Ready to Teach You How to Win
Amanda Breen - Entrepreneur
As one of the world's few self-made women billionaires, 54-year-old Jenny Just is no stranger to the world of finance â or the way it caters to men. "The biggest challenge to overcome is the expectation that women aren't capable around money," Just says. "I have a co-founder who's a man, and it's always been the case that the first dialogue usually goes to him. That wasn't new 25 years ago, and it's not new today."
/jlne.ws/3R9jq3q
**** JB: She got her start as an options trader.
US Elections May Be the Next Big Bet for Wall Street; Kalshi wants to list contracts on congressional elections; Regulator may make decision before November mid-term voting
Lydia Beyoud - Bloomberg
American political junkies may get to bet tens of thousands of dollars legally on the outcome of November's US congressional elections. After years of refusing to approve derivatives for betting on elections, Washington regulators are privately weighing a plan that could let people place as much as $25,000 on which political party will control the US Congress. The Commodity Futures Trading Commission may begin taking public feedback on the proposal from prediction-market operator Kalshi Inc. as soon as this month, according to people with knowledge the deliberations.
/jlne.ws/3PWJnC9
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