| January 18, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Wall Street's 'fear gauge' flashes warning that stocks might be headed off a cliff
Joseph Adinolfi - MarketWatch
Wall Street's fear gauge has fallen to its lowest level in months, and Wall Street strategists are concerned it could be a warning that the latest stock-market rally is coming to an end.
Specifically, they're worried that the low level of the Cboe Volatility Index, otherwise known as "the VIX," suggests that investors may have become complacent about the risks to their portfolios, raising the possibility that they could be caught off guard in a way that exacerbates the potential market mayhem, according to a series of research notes sent to clients and reviewed by MarketWatch.
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Libor phase out leads to record SOFR derivatives volumes; Derivatives exchange CME Group achieved a record of 7.6 million SOFR-based contracts traded, with record open interest of 35.7 million contracts.
Wesley Bray - The Trade
Interest rate benchmark Libor has historically been used in financial markets to determinine interest rates for financial contracts globally. However, since the global financial crisis in 2008/9, activity in the markets that Libor measures reduced, leading the benchmark to become unsustainable.
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A 'Shark Attack' Is Coming for the Stock Market, Charles Schwab Says
Jennifer Sor - Markets Insider
A major "shark attack" is coming for the stock market - and it means losses for investors who still think they're still dealing with the old economic and market cycle, according to Charles Schwab's chief global investment strategist Jeffrey Kleintop.
"The oceans are filled with resources and opportunities, but they also hold risks - like sharks," Kleintop said in a note on Wednesday, warning that markets are headed into a new cycle. Though a recession hasn't been officially declared, Kleintop believes a downturn began forming in 2022, spelling trouble for investors, as indicators point to the stock market entering a new phase.
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US stocks rise as investors bet inflation has reached peak
George Steer - Financial Times
US stocks edged higher and the dollar weakened on Wednesday after retail sales and producer prices declined in December, lifting the chances of a smaller rate increase when the Federal Reserve meets in two weeks.
Wall Street's blue-chip S&P 500 gained 0.5 per cent, buoyed by energy, consumer cyclicals and basic materials stocks, while the tech-heavy Nasdaq Composite rose 0.8 per cent. A measure of the dollar's strength against a basket of six peers fell 0.6 per cent, with the currency having weakened 9.8 per cent over the past three months as investors have increased their bets that inflation has peaked.
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A Stock Rally Could Hit Even As Wall Street's Feeling Very Bearish
Phil Rosen - Business Insider
On Tuesday, Goldman Sachs posted its worst earnings miss in a decade, while Morgan Stanley topped expectations but signaled that it's preparing for a recession.
Last week's cadre â JPMorgan, Bank of America, Wells Fargo and Citigroup â posted mixed results, but together gave a bleak prognosis for what comes next. The banks said they're putting aside funds to cushion themselves for a rocky 2023.
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| | | | | | Exchanges | | | Clearing Rules - Clearing Rule Book Update
Cboe
Cboe Clear Europe is pleased to announce that an updated version of its Clearing Rule Book (CRB) has been published on its website.
On 6 December 2022, Cboe Clear Europe published a consultation version of the CRB on its website for consultation. The amendments to the Clearing Rule Book were open for consultation for a 30 calendar day consultation period, which ended on 5 January 2023.
The final version of the updated CRB is now published on Cboe Clear Europe's website. It will be in effect as of 18 January 2023.
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NextGen Business Initiative, Part 1: Volatility strategies
Eurex
With the launch of NextGen ETD in June 2022, we changed the way exchange-traded derivative (ETD) contracts or products are identified. In March 2023, we are now following up with three initiatives that have been on our customers' wish list for some time: the integration of weekly options, volatility trading for single stock options and MSCI basis trading. With this date in mind, we asked Philipp Schultze, Head of Equity and Index Sales EMEA at Eurex, and Patric Rippstein, Head of Equity Volatility Trading at Bank Julius Baer to give us insights on volatility trading for single stock options.
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| | | | | | Regulation & Enforcement | | | SEC Comes for Gemini Too Late
Matt Levine - Bloomberg
US regulators sued crypto brokerages Genesis Global Capital and Gemini Trust Co. for breaking securities rules.
The Securities and Exchange Commission said on Thursday that the firms illegally raised billions of dollars from hundreds of thousands of investors through the so-called Gemini Earn program. That product, which let customers loan out their assets in exchange for interest payments, amounted to the offering of unregistered securities, the SEC said.
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| | | | | | Miscellaneous | | | The Six Big Market Questions for 2023
Edward Harrison - Bloomberg
Markets will be confronted with six major issues in 2023: inflation and China's reopening will dominate the macro economic backdrop. Among market dynamics, the yield curve, prospects of an equities bear market, the fate of the dollar and liquidity will be the key drivers. Expect another volatile year as a result.
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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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