| August 20, 2018 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
The Spread - Caddyshack Market - 8/17
JohnLothianNews.com
Another week, more Turkey worries. We don't talk about that at all in this week's options news recap, instead taking a peek at security, average bid/ask spreads and regulation.
Watch the video and see the stories referenced here »
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Trump Is Complaining to Donors in the Hamptons About Powell's Rate Hikes
Jennifer Jacobs and Saleha Mohsin - Bloomberg
President laments interest rate increases at GOP fundraiser; Federal Reserve has raised rates five times in Trump's term
President Donald Trump said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser on Friday that his nominee instead raised interest rates, according to three people present.
/bloom.bg/2vXTAbm
****SD: Now any move by the Fed can be viewed as political.
| | | | | | Lead Stories | | | Traders Bet U.S. Stocks Are About to Make a Big Move, Somewhere
Luke Kawa - BloombergQuint
Breakout or breakdown?
As the S&P 500 Index moves closer to January's record highs, traders are betting it could go in either direction -- in a big way.
Demand for two-month options that would pay off if the U.S. equity benchmark rises 5 percent or drops 9 percent over the next two months is elevated relative to those with strike prices much closer to the index's current value.
/goo.gl/JyJbrR
Gold Investors 'Give Up Hope' as Biggest Short in History Builds
Ranjeetha Pakiam, Elizabeth Burden, Yakob Peterseil, and Eddie van der Walt - Bloomberg (SUBSCRIPTION)
Gold is hitting new milestones of misery.
Exchange-traded funds tracking the metal have bled assets for 13 consecutive weeks, the longest run in five years, investors have placed the biggest gold short on record, and bullion's chief foe -- a strong dollar -- is extending its market grip.
/bloom.bg/2La4f7z
****SD: Another big short story - Gundlach Warns Record Treasury Shorts Risk Pain on Squeeze
Buy-side looks to keep location of trading desks in spite of Brexit
Hayley McDowell - The Trade
The majority of asset managers and hedge funds are looking to keep trading desks where they are despite many institutions establishing bases in Europe outside of the UK ahead of Brexit.
bit.ly/2vVBjeK
Turkey troubles tipped to boost banks' fixed income traders
Samuel Agini - Financial News
The wild currency market movements sparked by the unfolding political crisis in Turkey have boosted hedging activity and could power investment banks' trading businesses in the third quarter. For banks, which have suffered amid intermittent volatility in recent times, knock-on effects from the Turkish lira's sharp falls represent another revenue opportunity in a year in which geopolitical tensions have already helped fixed income divisions.
bit.ly/2w0nThQ
****SD: From the story: Axel Pierron, co-founder of management consultancy Opimas, added: "In the overall FX market, the volume of trading with currency pairs in which the Turkish Lira is one leg is quite small. Nevertheless, the overall macroeconomic situation, coupled with the current level of stress in global trades, is very likely to drive more hedging and speculative activity that will benefit the investment banks."
Venezuela Adds to Chaos With One of Biggest Currency Devaluations Ever
Eduardo Thomson and Fabiola Zerpa - Bloomberg (SUBSCRIPTION)
Venezuelan President Nicolas Maduro carried out one of the greatest currency devaluations in history over the weekend -- a 95 percent plunge that will test the capacity of an already beleaguered population to stomach even more pain.
One likely outcome is that inflation, which already was forecast to reach 1 million percent this year, will get fresh fuel from the measures. Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg's Café con Leche index. A massive exodus of Venezuelans fleeing the crisis to neighboring countries will likely increase and with it, tensions and restrictions like the ones seen over the past few days.
/bloom.bg/2w0qg4e
Kessler Topaz Chosen as Co-Lead Counsel Overseeing National Antitrust Case Alleging Manipulation of CBOE's Volatility Index
PRNewswire
A federal judge in Chicago has appointed Kessler Topaz Meltzer & Check partner Kimberly Justice to serve as co-lead counsel in a nationwide antitrust litigation stemming from the manipulation of prices of financial instruments linked to the Chicago Board of Options Exchange's Volatility Index.
/prn.to/2vYXFvZ
****SD: More background on Friday's news.
Hong Kong Bears Pile Into Short Bets on Chinese Automakers
Jeanny Yu and Cindy Wang - Bloomberg
Several Chinese automakers are among the worst performers in Hong Kong's equity markets this year, and their slump may be far from over.
Bets to go short BYD Co. soared to the highest in at least 12 years this month, according to IHS Markit Ltd. data, turning the Warren Buffett-backed Chinese manufacturer into the second-most shorted stock in the city. Bearish wagers on Brilliance China Automotive Holdings Ltd. are near the highest in more than six years. Since May, investors have also boosted short interest in Great Wall Motor Co. as a percentage of shares outstanding to a one-year high after their bets surged more than a year ago, Markit data show.
/bloom.bg/2wikE4u
| | | | | | Exchanges and Clearing | | | Euronext considering $1B+ bid for IHS MarkitSERV
SeekingAlpha
Bloomberg reports that Euronext is the lead bidder to acquire IHS (INFO +0.1%) business MarkitSERV for at least $1B.
The London Stock Exchange is also reportedly interested.
IHS initiated the sale process for the derivatives processing business back in May.
bit.ly/2nTp4eA
| | | | | | Regulation & Enforcement | | | Economists Say Trump's Tariffs Are Unfavorable for U.S. Growth
Jeff Kearns - Bloomberg (SUBSCRIPTION)
91% say tariffs will have 'unfavorable consequential impacts'; Most saw tax cuts aiding expansion in 2018 before effect fades
Business economists are sounding some sour notes about Trump administration policies, from trade to immigration to the budget, while expecting the short-term boost to growth from Republican tax cuts to lessen over time.
/bloom.bg/2vVO2yq
| | | | | | Technology | | | VestMark Feature Lets Advisors Trade Options Across All Accounts
Michael Thrasher - WealthManagement.com
Financial advisors use options in 21 percent of client accounts and they expect to increase that to 30 percent by 2020.
/goo.gl/P3cWcu
****SD: More background on the move announced on Friday.
IT Spending Remain Robust - For Now
Rob Daly - MarketsMedia
Wall Street's investment into information and communications technology should remain stable over the next 12 months but could start tapering in later 2019 and beyond, according to research published by industry analysis firm IDC.
bit.ly/2vZ9LFs
| | | | | | Strategy | | | The Biggest Risks for U.S. Equity Investors
Mohamed A. El-Erian - BloombergQuint
In recent weeks, U.S. stock markets have moved up and down in response to issues that go well beyond the traditional direct drivers of economic growth and corporate earnings. These "known unknowns," to borrow a phrase from former Defense Secretary Donald Rumsfeld, include the aftermath of the currency crisis in Turkey, the trade tariffs and sanctions skirmishes, the more uncertain outlook for the global economy and the exit from unconventional monetary policy.
bit.ly/2vTrE8L
****SD: General outlook piece.
| | | | | | Miscellaneous | | | Wall Street Erases the Line Between Its Jocks and Nerds
Liz Hoffman and Telis Demos - WSJ (SUBSCRIPTION)
Meet the straders.
Part risk-taking trader and part computer-whiz "strategist," they are prowling the halls at Goldman Sachs Group Inc., erasing a once-religious line between the jocks and the nerds.
"You say 'trader' and I don't even know what we're talking about," said Adam Korn, a 16-year Goldman veteran. "Everyone who comes to sales and trading needs to know how to code."
/on.wsj.com/2vXeW92
Call of the day: A 'Lehman-like episode' could usher in 'epic economic crisis'
Shawn Langlois - MarketWatch
The Wall Street Journal once described him as "perhaps the most powerful journalist in America." President Trump, however, isn't nearly as impressed, having called him a "political moron." Oh, and "a total dope" and "a loser."
With mixed reviews like that, it's no wonder George Will's colorful prediction of a looming fiscal crisis stirred up plenty of buzz over the weekend.
/on.mktw.net/2w0YPai
Turkey's Attempt to Stem the Lira Rout May Come Back to Haunt It
Constantine Courcoulas and Tugce Ozsoy - Bloomberg (SUBSCRIPTION)
Turkish Lira Has Effectively Become Untradeable, Bluebay's Riley Says
While Turkish authorities may have stopped the lira from hemorrhaging, their measures may cost the nation's debt and equity markets.
By squeezing liquidity out of the offshore currency swap market, the banking regulator forced speculators betting against the lira to close their positions. That also made it much harder for foreign investors in local bonds and stocks to hedge their currency risk. Now, it looks like they're bailing.
/goo.gl/iDVqoc
****SD: Stuck without the ability to hedge... I presume there have been a lot of sleepless nights for those with Turkish currency risk.
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