| | | | | | | | November 25, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Neil Lustyk announced on LinkedIn that after 45 years in the futures and options business, he retired last month. He had been an executive director at the CME Group and managed the trading floor at 141 West Jackson Blvd. at the end of his career, which started on that same trading floor of the Chicago Board Of Trade. Neil was my supervisor at Shearson American Express during the summer of 1981 in the 1929 grain room, where he ran the old First Wall trading desk. He started as a runner and eventually became a broker in the 30-Year Treasury Bond Futures trading pit, during the heyday of pit trading in the 1990s. He has been a loyal JLN reader and I wish him well on whatever comes next in his life and in his well-deserved retirement from the sometimes frenetic pace of the futures and options world. ~JJL
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Block Trade: Futures Discovery EP 18
JohnLothianNews.com
Block trades are a cornerstone of futures markets, represented by large-scale transactions executed off the public auction system. They provide a discreet avenue for significant market participants to maneuver substantial positions without the immediate impact on market prices typically seen in open outcry trading. Today, we're peeling back the layers of block trades, uncovering their nuanced dynamics, and exploring their pivotal role in the futures market ecosystem.
Watch »
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Former CFTC Official Launches Lean Consulting Firm to Navigate Regulatory Uncertainty
JohnLothianNews.com
In the high-stakes world of financial regulation, where billion-dollar fines and complex compliance rules are the norm, Dorothy DeWitt is taking a decidedly different tack. Her new venture, Tolt Strategies, aims to help innovative companies navigate the murky waters of regulatory uncertainty with a lean team of seasoned experts.
Watch »
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Rostin Behnam Reflects on Tenure As CFTC Chairman in John Lothian News FIA EXPO Interview
JohnLothianNews.com
Rostin Behnam In his last video interview with John Lothian News as chairman of the Commodity Futures Trading Commission, Rostin Behnam said he would work with the White House closer to the inauguration to hand the reins of the CFTC over to an acting chair, most likely one of the two Republican members of the commission. He would make sure there was a smooth transition. He said he would leave the CFTC after handing things over.
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| | | | | | Lead Stories | | | VIX Calls or S&P 500 Puts? Debate Rages On as Vol Spikes Fade
Christian Dass - Bloomberg
When it comes to hedging, should investors favor VIX calls or S&P 500 Index puts? The question has become central as spikes in the Cboe Volatility Index have grown increasingly ephemeral. Consider what happened last week, when the gauge surged more than 2.3 points intraday on two instances as concern increased over the escalating conflict between Russia and Ukraine. By the close, the VIX was up less than 1 point.
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Wall Street Fear Index Falls After Trump Appoints Bessent
George Glover - Barron's
The market is feeling mellow at the start of Thanksgiving week.
The Cboe Volatility Index, a widely followed Wall Street fear gauge that tracks S&P 500 options and trades under the ticker VIX, slid 0.7% to just over 15. Any reading below 20 is typically seen as a sign of lower uncertainty among investors.
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VIX kicks off Thanksgiving week lower to extend its November plunge
Christine Idzelis - MarketsWiki
A gauge of U.S. stock-market anxiety was down Monday morning, kicking off Thanksgiving week with a sharp drop that extended its plunge so far this month.
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Stock Market Volatility Can Be Scary But It Creates Opportunities
Bret Kenwell - Forbes
Big spikes in stock market volatility are really scary, and oftentimes, it comes with the added fear of economic uncertainty. During this time, investors are running for the hills, worried about their jobs and their assets.
In these instances, stocks suffer from a trio of negatives: They're liquid, they're volatile, and they're risk-on assets. Put another way, they're easy to sell when things get tough.
/jlne.ws/3AZfcZO
Wall Street's ETF Crew Ready to Pounce in Era of Crypto 'Degens'; Market experts foresee more crypto ETFs with Trump's new SEC; Leverage, options, quant strategies planned for new products
Emily Graffeo and Muyao Shen - Bloomberg
With a crypto-friendly commander-in-chief returning to the White House, Wall Street is ready to unleash a new generation of speculative products across the $3.2 trillion industry to sate investor appetite - from institutional newbies to die-hard retail traders. A handful of cryptocurrency-linked exchange-traded funds that simply track Bitcoin have attracted billions in fresh demand since the election. Now, with the second presidency of digital-asset booster Donald Trump approaching, executives and lawyers involved with ETFs say they are ginning up strategies to cater to all tastes. They described products ranging from defensively-tilted ETFs for crypto-curious professional money managers, to full-blown speculative wagers for the "degen"-like crowd - a self-described group of degenerate gamblers.
/jlne.ws/49ascs7
Inside the Blood Sport of Creditor-on-Creditor Violence
Tracy Alloway and Joe Weisenthal - Bloomberg
In the Zirp era of the mid-2010s, credit markets were booming and investors were clamoring for anything that would produce yield. So they were willing to accept fewer legal protections embedded in bond and loan documentation if it meant they could get a slice of a juicy deal. Today, the proliferation of these so-called "cov-lite" deals has been coming back to haunt the market, with investors now fighting each other over how much they can claw back from struggling companies. Some hedge funds have become incredibly creative when it comes to finding loopholes to exploit in deal docs.
/jlne.ws/4g4sMKc
MicroStrategy Accelerates Bitcoin Buying With Record Purchase; Third consecutive Monday that the firm has announced purchases; Software company now holds around $38 billion in Bitcoin
Monique Mulima - Bloomberg
MicroStrategy Inc. bought a record $5.4 billion in Bitcoin, the third major purchase announced this month by the crypto hedge fund proxy. Using the proceeds from a $3 billion convertible note issue and common share sales, the Tysons Corner, Virginia-based firm acquired 55,500 tokens from Nov. 18 through Nov. 24, according to an US Securities and Exchange Commission filing. MicroStrategy now owns around $38 billion in Bitcoin, making it the largest publicly traded corporate holder of the digital asset.
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| | | | | | Exchanges | | | Cboe Clear Europe Secures Regulatory Approval to Launch Securities Financing Transactions Clearing
Cboe
Cboe Clear Europe, a leading pan-European clearing house, today announced that it has received regulatory approval to clear European Securities Financing Transactions (SFTs). This was granted by De Nederlandsche Bank (DNB) and the Autoriteit Financiële Markten (AFM). With this approval, Cboe Clear Europe is set to introduce a first-of-its-kind service for European SFT transactions in cash equities and ETFs, which includes central clearing, settlement and post-trade lifecycle management. It is available to principal lenders, special participant lenders (UCITS and non-UCITS) and borrowers, with settlements conducted across 19 European Central Securities Depositories (CSDs).
/jlne.ws/4985fpv
Cboe Clear Europe gets regulatory green light to launch securities financing transactions clearing; The development will provide a service for European SFT transactions in cash equities and ETFs, including central clearing, settlement and post-trade lifecycle management.
Wesley Bray - The Trade
Cboe Clear Europe has received regulatory approval to clear European Securities Financing Transactions (SFTs), granted by De Nederlandsche Bank (DNB) and the Autoriteit Financiele Markten (AFM). With this approval, the pan-European clearing house will introduce a service for European SFT transactions in cash equities and ETFs, which includes central clearing, settlement and post-trade lifecycle management.
/jlne.ws/4ifYINQ
CME Group Completes Primary Conversion of 28-Day TIIE Interest Rate Swaps for Mexican Market
CME Group
CME Group, the world's leading derivatives marketplace, today announced that it successfully converted approximately 42 trillion pesos (the equivalent of $2 trillion) in outstanding notional open interest from 28-day TIIE swaps to corresponding F-TIIE overnight index swaps (OIS) on November 22.
In alignment with global best practices, the new F-TIIE benchmark moves the calculation of Banco de Mexico's benchmark rate from a survey-based methodology to one based on overnight repo transactions.
/jlne.ws/3OwJXbv
REVISED: Product modification Summary: Amendments to Final Settlement and Payment Dates of All Cryptocurrency Futures and Options (Amending the effective month from December
CME Clearing
Amendments to Final Settlement and Payment Dates of All Cryptocurrency Futures and Options (Amending the effective month from December to November 2024). For the full text of this advisory, please refer to the link below.
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| | | | | | Regulation & Enforcement | | | Portfolio Manager Ordered to Pay $11.2 Million and Prohibited From Managing Others' Money
SEC
On November 19, 2024, the United States District Court for the Western District of Wisconsin entered a final judgment against Edward S. Walczak, a former mutual fund portfolio manager, for fraudulently misrepresenting to investors how he managed risk in the Catalyst Hedged Futures Strategy Fund. The Court ordered Walczak to pay $11.2 million and also restricted Walczak from managing or advising on investments for others. The order follows an April 18, 2022 jury verdict finding against Walczak on the SEC's negligence-based fraud claims.
/jlne.ws/3AKd4Fm
| | | | | | Strategy | | | Credit Is So Hot That Traders Are Building Shorts
Eleanor Duncan and Tasos Vossos - Bloomberg
Asset managers with money to spend and few new deals to buy have pushed credit spreads to near all-time tights as the global economy remains strong. That's a signal for some that it's time to buy downside protection. Corporate bond shorts have risen 25% to almost $336 billion in the past year compared with a rise of 10.6% in institutional longs to $4.6 trillion, according to data compiled by S&P Global Market Intelligence. Wagers that prices will fall now stand at the equivalent of 7.3% of longs, up from 6.4% a year ago, based on securities borrowing. The rise in shorts comes as a gauge of complacency reaches the highest level since 2021, the amount of distressed debt falls to the lowest this year and US economic growth continues to confound skeptics. But expectations that incoming President Donald Trump's policies on tariffs and immigration will boost inflation worry economists, leading some fund overseers to hedge their bets.
/jlne.ws/3OmwGlM
This market-timing model nailed the 2022 meltdown. Now it's warning that stocks are a 'dead cold sell.'; Value Line's Median Appreciation Potential predicts where stock prices will be in three to five years
Mark Hulbert - MarketWatch
A little-known market timing indicator with a spot-on track record has just flashed a "dead cold sell" signal.
The indicator appears in the Value Line Investment Survey, published weekly by Value Line. It is the median projection from the firm's analysts of where the 1,700 mid- and large-cap stocks they track will be trading in three to five years. Devotees of this market-timing indicator refer to it as VLMAP, for Value Line's Median Appreciation Potential.
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CEDX Options Digest
Cboe (Video)
Tariq Dennison takes a look into the trading strategy of buying low delta long dated call options.
/jlne.ws/499mMgU
Behind the Ticker: Zacks Earnings Consistent Portfolio ETF (ZECP)
Cboe (Video)
/jlne.ws/3V3dOMn
| | | | | | Miscellaneous | | | Trump Heeds Wall Street by Picking Scott Bessent as Treasury Secretary; In the end, the drama-filled search landed where it started - with a hedge fund executive who'd spent months methodically laying the groundwork for a nomination.
Saleha Mohsin, Nancy Cook, Joshua Green, Annmarie Hordern, and Katherine Burton - Bloomberg
With one cabinet pick after another, President-elect Donald Trump has shown willingness - even eagerness - to flash contempt for the establishment. His nominees have amounted to sneers at US military brass, public-health experts, or even lawmakers in his own party. But there's at least one institution that Trump is reticent to rile: Wall Street. Trump said Friday that he had chosen Scott Bessent for Treasury secretary, turning to the hedge fund executive to serve in a post with oversight of the massive US government debt market, tax collection and economic sanctions.
/jlne.ws/3B5FbyD
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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
Publisher | | | Sarah Rudolph
Editor-in-Chief
| | | Jeff Bergstrom
Editor
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Disclaimer: All John Lothian Newsletters, JohnLothianNews.com, MarketsWiki.com and MarketsReformWiki.com are products of John Lothian News, a division of John J. Lothian & Company, Inc. The opinions expressed in all John J. Lothian & Company, Inc. publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any website or newsletter content.
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