| March 02, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | The 2022 Options Industry Conference keynote speaker will be Margaret Brennan, moderator of CBS News' Face the Nation and CBS News' chief foreign affairs correspondent. Given what is going on in the world, this seems like a timely selection. ~JJL
| | | | | | Lead Stories | | | Tiny imploding Russia fund draws rush of options bets
Saqib Iqbal Ahmed - Reuters
Options on a small, soon-to-be defunct exchange-traded fund tracking Russian stocks drew a rush of trading on Tuesday, as investors placed bets on what the fund's shares will do in its last few days of trading.
The surge in trading came a day after fund issuer Direxion said its Russia 2x ETF (RUSL.P), which seeks to deliver two times the daily performance of the MVIS Russia Index (.MVRSXTR), would cease trading on March 11, due to heightened volatility and restrictions on Russian securities imposed in the aftermath of Russia's invasion of Ukraine.
/jlne.ws/3MhlJjn
More pain ahead for euro, traders' derivatives bets signal
Saikat Chatterjee and Tommy Wilkes - Reuters
Traders are rushing into currency derivative markets to protect their portfolios against further euro weakness, a sign of broadening stress for European assets following Russia's invasion of Ukraine.
The euro has slipped to the weakest since May 2020 at $1.1059, down 2% since last Thursday .
But that decline is modest compared to moves on derivatives, where bearish euro positions have more than doubled in the same period, suggesting investors are preparing for further weakness.
/jlne.ws/35DmQsN
No Corner of U.S. Stock Market Left Untouched by War in Ukraine
Matt Turner and Bailey Lipschultz - Bloomberg
From tech companies to banks to cruise-ship operators, virtually no corner of the U.S. stock market has been left untouched by Russia's invasion of Ukraine.
The reasons are numerous. Oil prices have surged, boosting energy companies while threatening to fuel inflation already at a four-decade high. The conflict is casting uncertainty over the outlook for global economic growth even as Federal Reserve Chair Jerome Powell says the bank is poised to start raising interest rates this month. And volatility has surged as money-managers rush in and out of havens and industries like utilities and communication-service providers that are seen as relatively insulated from the latest risks.
/jlne.ws/3tn9Mjl
Individual Investors Undeterred by Market Volatility
Gunjan Banerji - WSJ
The market volatility is flashing a "buy" signal for many investors.
Last week, as the S&P 500 fell into a correction--defined as a drop of at least 10% from its high-- for the first time in two years, many investors stepped up their stock purchases, according to Bank of America.
/jlne.ws/3HGd86e
Russian Stocks in London Wipe Out 98% of Value in Two Weeks
Michael Msika and Joe Easton - Bloomberg
U.K.-listed depositary receipts of Russian companies are evaporating in value as sanctions take effect.
The Dow Jones Russia GDR Index, which tracks London-traded Russian companies, has plunged 98% in two weeks. The slump has wiped out $572 billion from the market value of 23 stocks, including Gazprom PJSC, Sberbank of Russia PJSC and Rosneft PJSC, according to Bloomberg calculations.
/jlne.ws/3K7xRS4
Mayhem Reigns in Oil Markets as Traders Avoid Russian Supply
Serene Cheong and Sharon Cho - Bloomberg
Global oil markets are in a state of flux unlike anything traders say they've seen in recent years as they grapple with the sudden disappearance of saleable products from the world's second-biggest exporter.
The invasion of Ukraine has rapidly made Russia a commercial outcast, resulting in most buyers and shippers avoiding cargoes of its crude, diesel, heavy naphtha and vacuum gasoil. That's causing abrupt changes in market structures, price dislocations and violent swings in freight rates.
/jlne.ws/3Mk4cXS
Oil Is Thicker Than Blood for OPEC
Jinjoo Lee - WSJ
When even Switzerland feels compelled to act then you know it is hard to remain neutral about Russia's invasion of Ukraine. But Saudi Arabia and the oil cartel it leads are willing to walk that diplomatic tightrope for now. Its oil-stained path will become slippery over time.
/jlne.ws/3IEQn42
Fed's Powell Leans Toward Quarter-Point Rate Hike, Thinks 'Soft Landing' Likely
Alexandra Scaggs - Barron's
Federal Reserve Chairman Jerome Powell said Wednesday that he is leaning toward a quarter-point rate increase in March to combat inflation, even after Russia's recent invasion of Ukraine sent global financial markets into a tailspin.
Powell addressed inflation that had surged to its quickest pace since the early 1980s as he spoke to the House Financial Services Committee on Wednesday for his semiannual testimony.
/jlne.ws/3hy1waR
| | | | | | Exchanges | | | OCC February 2022 Total Volume Down 2.6% Year-Over-Year
OCC
OCC, the world's largest equity derivatives clearing organization, announced today that year-to-date average daily volume through February 2022 was 43.7 million contracts, down 0.7 percent compared to year-to-date average daily volume through February 2021. Total volume was 807.3 million contracts, down 2.6 percent compared to February 2021.
/jlne.ws/3hBi69T
CME Group Reports February 2022 Monthly Market Statistics
CME Group
Overall ADV increased 19% year-over-year; Equity Index ADV grew 46%, driven by growth of Micro E-mini contracts; SOFR futures and options reach new records for ADV and OI
CME Group, the world's leading derivatives marketplace, today reported its February 2022 market statistics, showing average daily volume (ADV) increased 19% to 29 million contracts during the month.
/bit.ly/36WR1fe
Initial Listing of the Options on Micro Bitcoin Futures and Options on Micro Ether Futures Contracts
CME Group Special Executive Report
DATE: March 1, 2022 SER#: 8939 SUBJECT: Initial Listing of the Options on Micro Bitcoin Futures and Options on Micro Ether Futures Contracts Effective Sunday, Sunday, March 27, 2022, for trade date Monday, March 28, 2022, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. ("CME" or "Exchange") will list Options on Micro Bitcoin Futures and Options on Micro Ether Futures contracts as noted in the table below (the "Contracts") for trading on the CME Globex electronic trading platform ("CME Globex") and for submission for clearing via CME ClearPort
/bit.ly/3HuETPf
Russia Keeps Markets Closed for a Third Day
Quentin Webb - WSJ
Russia's financial markets will remain largely closed for a third straight day, as national authorities keep trying to stem the financial fallout from sweeping international sanctions following its invasion of Ukraine.
/jlne.ws/3IBBxLB
| | | | | | Regulation & Enforcement | | | A Big Step to Derivatives and SFT Alignment
Derivatives and securities financing transactions (SFTs) interconnect in a variety of ways and share many common features, but participants that straddle both markets have to use two or more similarly structured agreements to document their derivatives and SFT trades - a situation that can be both complex and duplicative. We think there's an opportunity to bring greater alignment and efficiency to these markets in certain use cases, which is why we've published new documentation that will give firms the option to trade derivatives and SFTs under a single ISDA Master Agreement..
/jlne.ws/3C6UF1y
| | | | | | Strategy | | | Russia ETF prices veer sharply from underlying value
Steve Johnson - Financial Times
Premiums for exchange traded funds focused on Russian securities listed overseas have surged to unprecedented levels even as other Russia-focused ETFs plunge to historic discounts amid disjointed trading.
The $446mn VanEck Vectors Russia ETF (RSX) closed on Tuesday at $8.26, a 177 per cent premium to its net asset value of $2.98 a share.
Similarly the iShares MSCI Russia ADR/GDR Ucits ETF (CSRU) closed at $28, 59.7 per cent above its NAV of $17.53.
/jlne.ws/3C5DwoW
| | | | | | Education | | | What Are Stock Warrants? - Forbes Advisor
Rebecca Baldridge and Benjamin Curry - Forbes
A stock warrant is a contract that lets you buy or sell shares of a company's stock at a specific price on a specific date. Warrants are similar to options contracts, although there are certain big differences between the two.
For the average retail investor, derivatives like warrants and options aren't really necessary. Though they can help to diversify a portfolio, given the risk they carry from leverage, investors need to be very attuned to price changes and market volatility.
/jlne.ws/3hvxxAr
| | | | | | Miscellaneous | | | History Shows Ukraine War Will Be a Stock Price Blip
Barry Ritholtz - Bloomberg
After Russia rolled tanks and troops into Ukraine, markets sold offâfor half a day. S&P 500 futures tumbled overnight, but by 2:30 p.m. in New York on Feb. 24, the S&P 500 was higher than before military action began. While there's been volatility, U.S. equities as of March 1 were still up since before the invasion.
A lot of clients at my wealth management firm called and wrote to ask how that could be. The short answer is, this isn't unusual. Historically, events such as wars, assassinations, and terror attacks are just not that meaningful to the factors that drive markets. These horrific events exact a terrible human toll, as measured in casualties and injuries, human suffering, and refugees. But the immediate reaction to dangerous mass conflicts like the war in Ukraine tends not to affect equity valuations over the long term. What drives equity prices are increased corporate revenue and profit, and the typical geopolitical event isn't big enough to change those very much. The impact on global gross domestic product is modest in all but a few outlier cases.
/jlne.ws/3pwMTcf
Who Are the Most Overpaid CEOs? New Ranking Finds Salaries That Don't Pay Off.
Lauren Foster - Barron's
When it comes to CEO salaries, you don't always get what you pay for.
A report from As You Sow, a shareholder advocacy organization, identified 100 companies that underperformed relative to the average S&P 500 company and still paid their chief executives richly.
"Year after year, these overpaid CEOs underperform. And especially during Covid when there were layoffs and lower revenues, some CEOs got higher pay," says R. Paul Herman, founder and CEO of HIP Investor, a San Francisco-based sustainability ratings, data, and analytics provider that performed the analysis on the CEO pay packages.
/jlne.ws/3hCFGTq
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