| May 04, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Options Traders Continue Betting Against PacWest, Western Alliance
WSJ
Options traders have been pressing bets against regional banks at a record clip in recent days.
That's continuing on Thursday. Shares of both PacWest and Western Alliance were halted for volatility after their prices plunged. PacWest is weighing potential routes for survival.
/jlne.ws/3LYikIe
Volatility Bets Surge
Gunjan Banerji - WSJ
The market for VIX options is heating up Thursday, with trading in calls jumping to the highest level since March, around the time Silicon Valley Bank collapsed.
More than a million call options tied to the volatility gauge have changed hands so far, according to Cboe Global Markets data.
/jlne.ws/3AVbwof
Wall Street's Fear Gauge Soars as Banks Hit Stocks: Markets Wrap
Rita Nazareth - Bloomberg via Yahoo Finance
A selloff in regional banks roiled trading desks around the globe, with brewing anxiety about the next financial shoe to drop making traders increase their bets on Federal Reserve interest-rate cuts.
/jlne.ws/3ntd4CV
Short Sellers Lose Big on New York Community Bancorp (NYCB) Amid Turmoil
Carmen Reinicke - Bloomberg
One regional bank is a thorn in the side of the multibillion-dollar short trade against the sector.
Traders betting against shares of New York Community Bancorp have been saddled with roughly $64 million in paper losses this year, according to data from S3 Partners LLC. It's by far the largest mark-to-market loss for US regional bank short sellers and the only unprofitable short position that's greater than $5 million. In contrast, traders who have shorted regional banks are up nearly $7 billion in paper profits so far this year.
/jlne.ws/44t1aJP
Podcast: London May Be a Great Place to Cash In on Market Volatility
Sommer Saadi - Bloomberg (Podcast)
There's a new investment playbook being used by central banks, one that spells opportunity for those who know the rules. This according to Alex Brazier, deputy head of BlackRock's Investment Institute, who tells In the City thatâfor investors who can get granular in volatile marketsâthere's money to made.
/jlne.ws/42nlIS3
A Way Out of the Debt Ceiling Impasse: 'Premium' Treasury Bonds
Lauren Foster - Barron's
Republicans in Congress are on a collision course with the Biden Administration over raising the debt limit, prompting a search for end-runs if they can't strike a deal by June 1 - the date the government could technically default on its obligations, according to Treasury Secretary Janet Yellen.
One possible way out: The Treasury could issue "premium" bonds at above-market interest rates, raising money without technically breaching statutory limits on the debt. Economist Paul Krugman recently floated the idea and it came up during the 2013 debt ceiling crisis.
/jlne.ws/3Vv7Nr7
PacWest Stock Drops to a New Low. First Horizon and Toronto-Dominion Call Off Merger.
Angela Palumbo, Rupert Steiner, and Brian Swint - Barron's
PacWest Bancorp plunged 45% to a new low before trading was halted Thursday, despite comments from its officials that tried to assuage customers and Wall Street. And another regional bank, First Horizon, was having its own troubles after it called off its merger.
PacWest (ticker: PACW) had a dismal trading day Wednesday, too. In the evening, it put out a statement that pointed out its deposits were rising.
/jlne.ws/3HBH72c
| | | | | | Exchanges | | | Cboe Global Markets Reports Trading Volume for April 2023
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today reported April monthly trading volume statistics across its global business lines. The data sheet "Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report" contains an overview of certain April trading statistics and market share by business segment, volume in select index products, and RPC/net capture, which is reported on a one-month lag, across business lines.
/jlne.ws/425FAti
Cboe Index Insights May 2023
Matt Moran - Cboe
I'm Matt Moran, and I've followed Cboe's indices for more than two decades. Each month, I'm sharing a look back at market activity across global indices and highlighting where there were opportunities for high yields or risk mitigation. I also love to share historical data and analyze how certain indices have performed over the decades. My hope is that these insights provide good food for thought to help you consider how you might approach similar situations in the future. So, let's dive in.
/jlne.ws/3Vyi4ma
NYSE-parent ICE tops profit views as market volatility spurs trading
Reuters
Intercontinental Exchange Inc (ICE.N) on Thursday reported first-quarter profit slightly above Wall Street views, as market volatility boosted the New York Stock Exchange parent's exchange unit, helping offset a rates-driven slump in its mortgage technology business.
Investors have been overhauling their portfolios to hedge against risk after a slew of interest rate hikes by the U.S. Federal Reserve and the recent banking crisis that has roiled markets.
/jlne.ws/3nw2Qlb
| | | | | | Regulation & Enforcement | | | SEC's Hedge Fund Rule Fails to Solve Two Main Problems
Aaron Brown - Bloomberg
The Securities and Exchange Commission wants hedge funds to report within 72 hours certain "trigger" events that might indicate financial stress. Although there are two very real problems when it comes to reporting by hedge funds, the new rule does not solve either of them.
/jlne.ws/3nw1tmx
U.S. SEC says focused on prosecuting misconduct that might threaten investors, markets
Reuters
The U.S. Securities and Exchange Commission is focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation or markets more broadly, SEC Chair Gary Gensler told Reuters on Thursday.
/jlne.ws/3nntVXS
| | | | | | Strategy | | | Stock-Market Volatility Perks Up
Eric Wallerstein - WSJ
Cratering regional bank share prices are finally encouraging traders to hedge their stock portfoliosâor bet on further declines.
The Cboe volatility index, or VIX, rose above 20 Thursday. Levels below that typically signify a lack of options buying, or complacency.
/jlne.ws/3p90k4L
Gigantic VIX Trade
Cboe (Video)
In #Vol411, Scott Bauer @cboesib covers some recent unusual #options activity. $VIX $SPX
/jlne.ws/3nzhx75
| | | | | | Miscellaneous | | | Nobody Trusts the Banks Now
Matt Levine - Bloomberg
What is going on? I think there are two ways to think about the basic business of banking:
Banks borrow short to lend long. They use deposits (which can be withdrawn at any time) to fund loans and buy bonds (which don't get repaid for a long time).
Banks really borrow long to lend long. They use deposits to fund loans and buy bonds, and as a technical legal matter those deposits are short-term (and can be withdrawn at any time), but they aren't really. Most people â and most businesses â keep their money at a bank because it is convenient, it's where their paycheck direct deposit and bill auto-pays are set up, and it would be a pain to move to a new bank. Most people do not obsessively check the interest rates on their bank accounts to find the highest one, or obsessively check the financial condition of their bank to see if it's safe. Banks invest in customer relationships â by building branches and cross-selling services and offering conveniences like online banking â and those relationships are long-term and sticky and include deposits. In a real economic sense, banks are making loans and buying bonds that match the duration of their long-term, relationship-driven deposits.
/jlne.ws/3VvQXbv
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| | | Jeff Bergstrom
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