| August 30, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | The Options Market Is Accentuating the Swings in Stocks; Some strategists say a reversal in options trading and hedge fund activity are partly to blame for the market's rising volatility
Eric Wallerstein - The Wall Street Journal
As stocks rallied over the summer and sank in recent days, a common force exacerbated the moves: the options market. Federal Reserve Chairman Jerome Powell spooked investors Friday when he vowed the central bank would keep fighting inflation, even at the expense of economic growth. The S&P 500 suffered its biggest one-day loss in more than two months. The market's summer rally, however, began fizzling a week earlier, coinciding with the Aug. 19 expiration of more than $2 trillion in options. Strategists say that left the market vulnerable to a spike in volatilityâone that could feed upon itself if options market dynamics take hold.
/jlne.ws/3R3kFld
The 'Fear Gauge' Suggests Wall Street is Spooked, But Not Running for the Hills
Eric Wallerstein - The Wall Street Journal
Wall Street's "fear gauge" is starting to make some noise.
The Cboe Volatility Index -- known as the VIX, it's used as a measure of expected stock-market turbulence -- has risen to 26.2 from 19.6 on Aug. 19.
/jlne.ws/3pUwwG7
Panic Button Is Nowhere in Sight as Memory of 7th S&P 500 Market Rout Fades
Lu Wang - Bloomberg
Worried? Yes. But investors have evinced few signs of panic amid a stock market drubbing that has wiped out $3 trillion, going by everything from fund flows to options trading.
One sign nerves are in check: as the S&P 500 dropped more than 3% Friday, the Cboe Volatility Index, a measure of options cost that's also known as VIX, was stuck near 25, lower than in the six other instances this year when stocks sold off like this.
/jlne.ws/3AAZ7oO
Powell's Tough Talk Leaves Stocks and Dollar on the Edge
Simon White - Bloomberg
Jerome Powell did as was broadly expected in his Jackson Hole speech, renewing the Federal Reserve's hawkish vows. Now that the dust has settled, here are four views on the direction of the main assets in the coming months:
Stocks have more downside in the immediate term (next two weeks)
The Cboe Volatility Index (VIX) should stay supported
Short-term yields should continue trending higher, but longer-term yields remain relatively muted. The real yield curve should continue flattening quite aggressively
The dollar rally should soon peter out
/jlne.ws/3R4WW3S
Brace for Volatility and This Fed Pivot Trigger: JPMorgan's Kelly
George Glover - Markets Insider
More volatility may well lie ahead for stocks, given just one economic shock could tip the US into recession, a top JPMorgan strategist has warned.
The bank's David Kelly said the Federal Reserve seems determined to stick to a tough line on red-hot inflation, going by Chair Jerome Powell's speech at Jackson Hole on Friday.
/jlne.ws/3AYAX9b
Stock Market Outlook: Investor Complacency Too High Amid Recession Worries
Matthew Fox - Markets Insider
Stock market investors are acting too complacent amid growing economic uncertainties, DataTrek Research co-founder Nicholas Colas told clients on Tuesday.
Given elevated inflation levels, concerns of an economic recession, and a tightening Federal Reserve, you'd expect there to be more fear in the stock market, he said, pointing to slightly above average readings in Wall Street's fear gauge, the VIX.
/jlne.ws/3RqR1Gp
RIP Great Moderation, hello Great Volatility
Jamie McGeever - Reuters
If investors think the volatility that has rocked global markets this year is transitory, they are in for a shock.
The post-pandemic inflation and energy shocks could be the final nail in the coffin of the "The Great Moderation" - the years of low inflation, low interest rates, steady growth and deepening globalization from the mid-1980s to the Global Financial Crisis of 2007-2009.
/jlne.ws/3pWwYUk
| | | | | | Exchanges | | | Equity Index Derivatives: Amendments to the Contract Specifications for FTSE 100 Declared Dividend Index Futures and for Index Total Return Futures
Eurex
The Management Board of Eurex Deutschland took the following decisions with effect from 5 September 2022: Amendments to the Contract Specifications for Futures Contracts and Options Contracts at Eurex Deutschland ("Contract Specifications") regarding: Introduction of quarterly expiries for FTSE 100 Declared Dividend Index Futures; Deletion of specific requirements for FTSE Index Futures and EURO STOXX Select Dividend 30 Index Futures with respect to Exchange for Physicals Index (EFP-I) transactions; Adjustment of minimum number of contracts for block trades ("MBTS") and for Trade-at-Market transactions ("TAM") of FTSE 100 Index Total Return Futures and EURO STOXX Select Dividend 30 Index Total Return Futures.
/bit.ly/3R2FTPV
| | | | | | Regulation & Enforcement | | | FBI Asks DeFi Platforms to Increase Security Measures, Warns Crypto Investors Against Vulnerabilities
Parikshit Mishra - CoinDesk
The Federal Bureau of Investigation (FBI) has asked decentralized finance (DeFi) platforms to beef up security measures and warned investors against the vulnerabilities in those platforms.
The FBI's warning comes as DeFi platforms, which do not use third parties to carry out financial transactions on the blockchain, have suffered several major attacks this year, which includes the massive near $650 million Ronin bridge exploit earlier this year.
/jlne.ws/3cB1Arl
| | | | | | Education | | | How to Short Crypto and Risks to Consider
Sam Becker - Business Insider
When you think about investing, the idea is usually that you profit when the price of an asset increases, and lose money when it falls.
Another, more-advanced approach is short-selling, or shorting. It involves betting against an asset because you expect its price to fall in the future.
/jlne.ws/3PZDeFl
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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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