| October 10, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Pro Traders Working the Stock Options Market Like No Time Since Financial Crisis
Vildana Hajric - Bloomberg
With a lumbering bear market whipping up volatility, the biggest traders are wringing stock options for all they're worth.
The largest players on the options market bought more than $10 billion in puts on individual stocks last week, a record for that group and close to the most ever by any cohort of traders, according to Sundial Capital Research. The rush for protection came as the S&P 500 slumped into the weekend and the Cboe Volatility Index spiked above 32 to the highest level since June.
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Don't Expect Stock Market Volatility To Subside Anytime Soon, Says Fear Gauge
Eric Wallerstein - WSJ
Derivatives markets sent out an ominous signal to investors on Monday, pointing to a persistently volatile stock market for the coming months.
Futures contracts tied to the Cboe Volatility Index, or VIX, rose above 30 across the entire term structure, according to FactSet. That's far above the long-term average of 20, and at a level usually associated with increased angst among options traders betting on stock-market gyrations.
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Currency-Hedged ETFs Start to Make a Comeback; The funds draw interest, albeit modest, as currency volatility roils global markets
Lori Ioannou - The Wall Street Journal
Shifts in monetary policy around the world have added volatility to foreign-exchange markets. As a result, exchange-traded funds that invest in foreign stocks and bonds and use currency-hedging techniques have generally fared better than similar funds that don't use currency hedging. Such fundsâwhich use hedging to protect the funds against wild swings in the foreign-exchange marketâfell out of favor over the past five years. But more recently, nearly every one of the ETFs has outperformed its unhedged counterparts as the dollar continues its upward trajectory.
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'Crash-protection mode' helps managed futures ETFs crush rivals
Steve Johnson - Financial Times
With equities, bonds and real estate all underwater this year, most exchange traded fund investors are nursing sharp losses.
One small corner of the ETF world has delivered decent returns, though, despite â or maybe because of â the red ink elsewhere.
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El-Erian: Core Inflation Is Rising, Markets Fear Another Fed Error
Markets Insider
Top economist Mohamed El-Erian warned core inflation is still rising in the US while adding that markets are on edge that the Federal Reserve will make another mistake.
Speaking on CBS' "Face the Nation" on Sunday, El-Erian said the US still has an "inflation issue" ahead of key Consumer Price Index data out Thursday.
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The Fed Will Slow Rate Hikes As Risks for a Financial Accident Grow
Jennifer Sor - Markets Insider
The Fed will be forced to slow its pace of rate hikes as it risks not only sending the economy into a recession, but causing a financial accident as well, according to analysts from Charles Schwab.
The central bank issued three consecutive 75-basis-point rate hikes this summer in response to growing inflation, which hit a 41-year high in June, with expectations now for the Fed to keep tightening until the policy rate hits 4.5% to 4.75%.
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Stocks could fall 'another easy 20%' and next drop will be 'much more painful than the first', Jamie Dimon says
Joseph Adinolfi - MarketWatch
JPMorgan Chase & Co. JPM, -0.93% CEO Jamie Dimon warned investors on Monday that he expects markets to remain volatile for the foreseeable future, and that the S&P 500 could easily fall another 20% as the Federal Reserve continues to raise interest rates.
Asked by CNBC about where he expects stocks to bottom, Dimon said he couldn't say for sure, but that it's easy to imagine the S&P 500 falling by another 20% as volatile markets become even more "disorderly" as rates continue to climb.
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The Most Powerful Buyers in Treasuries Are All Bailing at Once
Liz McCormick, Garfield Clinton Reynolds, and Michael Mackenzie - Bloomberg
Everywhere you turn, the biggest players in the $23.7 trillion US Treasuries market are in retreat.
From Japanese pensions and life insurers to foreign governments and US commercial banks, where once they were lining up to get their hands on US government debt, most have now stepped away. And then of course there's the Federal Reserve, which a few weeks ago upped the pace that it plans to offload Treasuries from its balance sheet to $60 billion a month.
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OPEC+ cut draws hedge funds back into the oil market
John Kemp - Reuters
Portfolio investors were encouraged to return to the oil market early last week by the prospect of production cuts by OPEC and its allies, which offset some bearishness induced by the prospect of an imminent recession.
Hedge funds and other money managers purchased the equivalent of 62 million barrels in the six most important petroleum futures and options contracts in the week ending Oct. 4., according to regulators' records.
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| | | | | | Exchanges | | | CME Group Achieves Record Open Interest and Volume in Adjusted Interest Rate Total Return Futures
CME
CME Group, the world's leading derivatives marketplace, today announced that S&P 500 Adjusted Interest Rate (AIR) Total Return futures reached an open interest (OI) record of 268,073 contracts on October 5, surpassing the prior record of 267,754 contracts on September 30, 2022.
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MIAX Exchange Group - Options & Equities Markets - Final Reminder: Reg SCI / SIFMA BCP Testing On Saturday, October 15, 2022
Press Release
As previously announced in the April 19th, September 19th and September 28th Alerts, the MIAX Exchange Group will be participating in the 2022 SIFMA BCP Testing on Saturday, October 15, 2022. All Members that are required to test with MIAX Options, MIAX Pearl Options, MIAX Emerald Options and/or MIAX Pearl Equities Exchanges in accordance with Regulation Systems Compliance and Integrity (Regulation SCI) were notified on April 5, 2022. However, all Members are encouraged to test.
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| | | | | | Strategy | | | It's not all about a Fed pivot
Richard Bernstein - Financial Times
So many recent market moves have been driven by the intense examination of the public statements of US Federal Reserve board members for clues regarding the possibility of a "pivot" by the central bank.
This relentless parsing has caused short-term volatility spikes as investors rush to buy or sell speculative assets like technology stocks and cryptocurrencies at even the remotest suggestion from the Fed that they might curtail or maintain tight monetary policies.
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Here's how you'll know stock-market lows are here, says investor who called crash in '87
Joseph Adinolfi - MarketWatch
Billionaire hedge-fund investor Paul Tudor Jones, founder of Tudor Investment Corporation, said investors looking to time the bottom in stocks should keep a close eye on short-term Treasury yields.
Speaking Monday during an interview with CNBC's "Squawk Box," Jones said he expects stocks and bonds will continue to sink as the U.S. economy slides into a recession in the months ahead.
/jlne.ws/3T9PcOL
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| | | Jeff Bergstrom
Editor
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