| September 14, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | The CME Group loves challenges and the latest is a Micro Cryptocurrency Futures Trading Challenge. During this hands-on, risk-free trading challenge, you can compete against other traders to win cash prizes. And if you are new to trading, the CME Group will provide educational materials and tips from veteran futures and options trader Jim Iuorio. You are trading in a simulated environment while competing for the top spot in the competition. The event runs from September 25 to 29, so sign up soon.
| | | | | | Lead Stories | | | Options bets blamed for amplifying U.S. stock-market plunge after hot August CPI reading
William Watts - MarketWatch
Hotter-than-expected U.S. August inflation data was unwelcome Tuesday, but the plunge in stocks may have been exacerbated by institutional traders and others who dashed for the exits after placing big, leveraged bets via the options market on a cooler consumer-price index, according to some market watchers.
"There were rumors around about institutional call buying...large bets...and I think that's what you're seeing," Art Cashin, head of floor operations at UBS, told CNBC on Tuesday. Call options give the holder the right but not the obligation to buy an underlying asset at a set price by a set time.
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Leveraged ETFs Added to Stock Chaos With $15.5 Billion Selling
Sam Potter - Bloomberg
In Tuesday's tumultuous trading session was a pattern market watchers have seen time and again this year: A bad day for stocks gets worse, right around the close. Suspicion is growing that a breed of complex but increasingly popular ETF may be helping fuel the trend.
With the main equity gauges all down heavily on the day, leveraged exchange-traded funds -- which use options to amplify returns, usually of major indexes -- added around $15.5 billion of selling pressure to the rout, according to estimates from Nomura Holdings Inc. It's likely a big reason why stocks took another dip in the last 30 minutes to close out a particular brutal trading session.
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This Sell-Everything Rout Leaves a Sinking Feeling: Tech Watch
Thyagaraju Adinarayan - Bloomberg
The last time technology stocks saw a selloff of the scale of Tuesday's wipeout, the Nasdaq 100 Index was a week away from kicking off a monster rally thanks to unprecedented stimulus from the Federal Reserve. But panic-stricken bulls don't have the Fed on their side this time.
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Wall Street stocks stabilise after sharp sell-off
Ian Johnston and Hudson Lockett - Financial Times
US stocks steadied on Wednesday after the worst sell-off on Wall Street since June 2020, as hotter than expected inflation data fuelled bets of more aggressive interest rate rises by the Federal Reserve.
The broad S&P 500 and the technology-heavy Nasdaq Composite were up 0.3 and 0.7 per cent respectively by the early afternoon in New York. The dollar slipped 0.3 per cent against a basket of six other currencies, following gains in the previous session.
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Goldman Sees Fresh Pain on Wall Street as Real Rates Rise; Higher inflation-adjusted yields are hurting market valuations; Christian Mueller-Glissmann sees enduring equity volatility
Denitsa Tsekova - Bloomberg
Goldman Sachs Group Inc.'s Christian Mueller-Glissmann has a simple takeaway for clients on that latest inflation shock: Wall Street's bad year is set to get worse. According to the managing director of portfolio strategy and asset allocation, a behind-the-curve Jerome Powell is now under even greater pressure to ramp up inflation-adjusted interest rates in order to cool the hot business cycle -- threatening fresh damage for cross-asset portfolios. All that suggests valuations for pretty much everything bar the US dollar have scope to tumble further given the Federal Reserve is hellbent on pushing real yields even higher after a 10-year benchmark briefly topped 1% on Tuesday. That level, last seen in 2018, looks set to materially constrict economic growth ahead.
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Bond Market Volatility Hits 2008 Levels As Fed Runs Off Balance Sheet
Matthew Fox - Markets Insider
Bond market volatility has hit levels seen during the 2008 Great Financial Crisis, and that volatility is starting to bleed into the stock market, according to Ned Davis Research.
In a Tuesday note, NDR highlighted how big of an impact the Fed's quantitative tightening program could have on asset prices as liquidity in the bond market continues to deteriorate.
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The next financial crisis may already be brewing, but not where many expect
Joseph Adinolfi - MarketWatch
A growing number of traders, academics, and bond-market gurus are worried that the $24 trillion market for U.S. Treasury debt could be headed for a crisis as the Federal Reserve kicks its "quantitative tightening" into high gear this month.
With the Fed doubling the pace at which its bond holdings will "roll off" its balance sheet in September, some bankers and institutional traders are worried that already-thinning liquidity in the Treasury market could set the stage for an economic catastrophe â or, falling short of that, involve a host of other drawbacks.
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| | | | | | Exchanges | | | Crypto Options Trading Startup Synquote Raises $2.8M From Initialized, Polygon
Cameron Thompson, Danny Nelson - CoinDesk
Crypto options trading startup Synquote closed a $2.8 million seed funding round to build out a platform for trading derivatives contracts in tokens that don't usually have such markets. Initialized Capital led the round.
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BOX Exchange: Annual SIFMA BCP/ Reg SCI Test - October 15, 2022
BOX Options
In coordination with other market centers and in support of Regulation SCI, BOX Exchange LLC ("BOX") will be participating in the annual SIFMA BCP Test on Saturday, October 15, 2022. As required by Regulation SCI and BOX Rule 2100, certain BOX Participants are required to participate in an annual disaster recovery functional testing.1 BOX will be leveraging the annual industry-wide SIFMA BCP Test and BOX specific Pre-Tests to fulfill this requirement. BOX has individually notified the Designated BCP/DR Participants who are required to participate in the SIFMA BCP Test and the BOX specific Pre-Test.
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New Product: Initial Listing of Tuesday Weekly Options and Thursday Weekly Options on E-mini Nasdaq-100 Index Futures Contracts - Effective October 03, 2022
CME Clearing
Notice Date 13 September 2022; Effective Date 03 October 2022; Initial Listing of Tuesday Weekly Options and Thursday Weekly Options on E-mini Nasdaq-100 Index Futures Contracts.
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Business Indicators For August 2022
Deutsche Börse Group
A summary of Deutsche Börse Group's business indicators for August 2022 is now available on their website.
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| | | | | | Strategy | | | Volatility expected as $490M in ETH options expire shortly after the Ethereum Merge
Marcel Pechman - CoinTelegraph
Given the current state of the wider crypto market, some traders might be surprised to learn that Ether (ETH) has been trading in an ascending trend for the past 17 days. While the entire cryptocurrency market experienced a 10% decline on Sept. 13, Ether's price held firm near the $1,570 support level.
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Watch Go 'Long' Volatility Ahead of FOMC, Jefferies Says
Bloomberg (Video)
Sean Darby, chief global equity strategist at Jefferies, discusses the outlook for market, central banks' policies, and the best trade ahead of the FOMC decision. He speaks with Shery Ahn and Haidi Stroud-Watts on "Bloomberg Daybreak: Asia." (Source: Bloomberg)
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Kevin O'Leary Says It May Be Time to Buy Stocks As Volatility Returns
Zahra Tayeb - Markets Insider
"Shark Tank" star and venture capitalist Kevin O'Leary said volatility has returned to markets, likely making it a good time to snap up stocks.
His comments to CNBC came after US stocks plunged Tuesday with the the Dow Jones Industrial Average losing more than 1,200 points to mark its worst day since June 2020. The sharp fall came after US inflation readings came in hotter-than-expected after August CPI rose 8.3%, higher than the anticipated 8.1%.
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| | | | | | Miscellaneous | | | Hedge funds race to bet on outcome of Ethereum 'Merge'
Laurence Fletcher and Joshua Oliver - Financial Times
The looming switch of the Ethereum blockchain to a new, greener system has sparked a frenzy of trading by hedge funds racing to place bets ahead of one of the biggest events in the short history of cryptocurrencies.
Traders have been scooping up options on ether tokens â the flagship crypto coin trading on Ethereum â betting on price volatility or protecting themselves against sudden sharp moves ahead of the "Merge".
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Column: Get used to Wall Street's churn and mini-cycles
Jamie McGeever - Reuters
The whiplash on Wall Street following the latest U.S. inflation figures should be a warning to investors: get used to it, because there will be plenty more in the months ahead.
There's a growing belief that the downturn in equities that broadly spanned the first half of the year is being replaced by a more volatile, foggier period of 'mini-cycles', which will see bouts of gains or losses suddenly evaporate and reverse.
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Elon Musk Twitter Deal: Hedge Funds Bet He Will Be Forced to Complete Purchase
Katherine Burton, Hema Parmar, and Yiqin Shen - Bloomberg
Hedge funds including David Einhorn's Greenlight Capital and Pentwater Capital Management are wagering that Elon Musk won't get his way this time.
Musk, the world's richest person and a renowned sparring partner with regulators over securities laws, is trying to back out of his agreement to buy Twitter Inc. for $44 billion. Several hedge funds have purchased stock, options or bonds -- speculating that Musk will lose a trial scheduled to begin Oct. 17 in Delaware Chancery Court.
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