| May 16, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Zero-Day Stock Options 0DTE Battle With Long-Dated Ones in Trendless Market
Lu Wang - Bloomberg
A year after being shaken awake by an ultra-aggressive Federal Reserve, the stock market has gone back to sleep. Analysts trying to explain how it happened say dynamics in derivatives trading may be playing a role.
While cooling inflation and better-than-feared earnings have helped promote calm in a market less vulnerable to valuation shocks after last year's declines, fresh research is being published almost daily into how newly popular varieties of stock options act as forces for and against equity volatility.
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How the VIX1D Index Performance Compares to the VIX Index and Other Volatility Indices in 11 Charts
Cboe
The recent launch of the Cboe 1-Day Volatility IndexSM (VIX1DSM), has generated increased interest in volatility indices. The VIX1D Index joins a suite of Cboe volatility indices, which includes the VIX9DSM Index, VIX Index, VIX3MSM Index, VIX6MSM Index, and VIX1YSM Index. The VIX1D Index seeks to measure the expected volatility of the S&P 500 Index over the current trading day and has been designed to account for the compressed measurement of expected volatility over a single day, differing from the VIX Index.
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Premarket stocks: Wall Street's 'fear gauge' is rising as US debt talks drag on
Nicole Goodkind - CNN Business
The United States government is inching closer to its so-called debt ceiling X-date, when the Treasury could run out of cash and extraordinary measures to pay all government obligations, and both political parties remain at odds with no concrete solution to avoid a default.
And while the odds of the US government actually defaulting on its debt still remain relatively low â it would likely trigger an economic disaster and both sides of the political aisle have a lot to lose â Wall Street is wary of what the ongoing debate means for equity markets.
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Wall Street Braces for Stock Market Chaos As Debt-Ceiling Crisis Drags on
George Glover - Markets Insider
The debt-ceiling face-off has become the latest worry for Wall Street in a year when investors were already fretting about banking turmoil, rising interest rates, and a looming recession.
BlackRock, JPMorgan, and Morgan Stanley all said Monday that the ongoing impasse in Washington could trigger a fresh bout of stock-market volatility.
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Debt Ceiling May Be 'Lose-Lose' Situation for Stocks: Morgan Stanley
George Glover - Markets Insider
Investors face a can't-win situation no matter how the debt-ceiling deadlock in Washington ends, according to Morgan Stanley's Mike Wilson.
The bank's chief US equity strategist indicated Monday that he agreed with clients' view that the ongoing standoff is "a lose-lose event for markets", with stocks suffering due to either heightened volatility or a future slowdown in spending.
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What to expect as US nears 'unthinkable' debt default
Kate Duguid and Colby Smith - Financial Times
The US government is weeks away from running out of cash, officials have warned, raising the possibility it will default on its bonds if a political fight in Washington over the debt ceiling is not resolved.
Analysts, economists and industry groups expect the White House and Congress will, as has happened so many times previously, strike a deal and stave off a default.
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Future Returns: Wealthy Families Are Leaning Into Riskier Investments
Abby Schultz - Barron's
One of the biggest differences between most investors and a family office with multi-millions in assets is the latter's capacity to take on more risk, often by putting more money in longer-term, less liquid investments.
A survey conducted by Goldman Sachs of its wealthiest families this past Januaryâand recently releasedârevealed 44% of their holdings are in alternatives, an allocation more common among pensions and endowments than retail investors. This group also has 28% in public stocks (down a little from 31% in 2021).
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Volatile banking sector saw big moves from funds in first quarter
David Randall and Carolina Mandl - Reuters
Fund managers zeroed in on the U.S. financial sector during the first quarter, a period during which lenders' shares were rocked by volatility following the worst banking crisis since 2008, regulatory filings showed on Monday.
The S&P Regional Banking Index fell approximately 25% during the quarter as a run on deposits sank Silicon Valley Bank and Signature Bank in March, both of which were at the time the largest banking failures since the Great Financial Crisis. The S&P Regional Banking index is now down 36% for the year to date.
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| | | | | | Exchanges | | | CME Group U.S. Treasury Futures Open Interest Surpasses Record 17 Million Contracts
CME Group
CME Group, the world's leading derivatives marketplace, today announced that open interest (OI) in its U.S. Treasury futures reached a record 17,222,551 contracts on May 12, the fifth consecutive day of record OI. Prior to the record week, the previous OI record of 16,698,659 contracts was set on February 19, 2020. "Market participants continue to turn to our deeply liquid U.S. Treasury futures in record numbers as they navigate historic uncertainty and manage fixed income risk," said Agha Mirza, CME Group Global Head of Rates and OTC Products
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Euronext to launch 'dark' share trading by fourth quarter
Huw Jones - Reuters
Pan-European exchange Euronext said on Tuesday it would launch a new "dark" trading service by the fourth quarter to attract large investors as bourses take on banks in off-exchange trading.
Exchanges in Europe have repeatedly criticised banks for piggy backing on their prices for trading big blocks of shares away from "lit" exchanges whose prices are public.
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| | | | | | Regulation & Enforcement | | | Isda survey explores refresh of FX derivatives rule book
Rebekah Tunstead - Risk.net
The rules governing how foreign exchange derivatives are documented and traded may be set to change as the industry body overseeing them surveys its members on whether they could be improved.
Though most market participants agree that some updates to the 25-year-old FX and Currency Options Definitions are necessary, lawyers say the International Swaps and Derivatives Association will need to tread a fine line to ensure widespread adoption of any amended documentation - particularly in
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ISDA AGM Studio: Debbie Toennies and Jacques Vigner
International Swaps and Derivatives Association
Debbie Toennies, managing director and head of regulatory affairs for the Corporate and Investment Bank at JP Morgan, and Jacques Vigner, chief strategic oversight officer for global markets at BNP Paribas, talk to ISDA's head of capital Panayiotis Dionysopoulos about the importance of harmonizing the Basel III capital rules across jurisdictions.
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EU Backs Tougher Tax Rules On Crypto Transactions
Barron's
EU ministers agreed stronger rules Tuesday to crack down on the use of cryptocurrencies in tax fraud, as Brussels bolsters its efforts to regulate the volatile sector.
Regulators worldwide are increasingly worried about the lack of oversight of the digital currency sector but the European Union has already taken steps to protect investors.
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| | | | | | Miscellaneous | | | Chicago's Empty Office Towers Threaten Its Future as a Major Financial Hub; City's real estate market had worst quarter since the pandemic; New Mayor Brandon Johnson faces city's flailing fortunes
Isis Almeida and Shruti Singh - Bloomberg
In the heart of Chicago's financial center, a seven-story building occupying much of a city block was once home to the world's largest options exchange. Now, it's collecting dust. The property, for decades home to the floor where options traders jostled and screamed orders at each other, has been on the market since 2019, but owner Cboe Global Markets Inc. can't find a buyer.
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Rising Stocks: Market Anomaly Is Playing By Its Own Rules
John Authers - Bloomberg
Patterns and correlations, like rules, were made to be broken. Markets are aiming to allocate capital in an economy that is constantly evolving, so no relationship is ironclad. That said, the advance of the US stock market looks really, really weird.
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| | | Jeff Bergstrom
Editor
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