| June 27, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Options Discovery
JohnLothianNews.com
Today John Lothian News is kicking off a new segment of The Spread called Options Discovery, hosted by Alex Teng. In this series viewers will learn the ins and outs of options along with Alex. He will take viewers through a wide variety of topics in the options industry, aided by interviews with experts and his own research. Our goal at JLN is to cut down your learning curve and make the world of options accessible to everyone.
Watch the video »
| | | | | | Lead Stories | | | Rise of ETFs 'destabilising' emerging markets
Steve Johnson - Financial Times
The explosive growth of index-tracking exchange traded funds has destabilised emerging economies, increasing their vulnerability to global shocks, according to economists at the Italian central bank.
Their analysis found that investment funds were far more likely than other sources of private sector funding, such as banks, insurance companies and pension funds, to withdraw funding from developing countries during global shocks.
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'We will humble them': four fuel traders took on Wall Street and saved $1.2bn
Steff Chávez - Financial Times
Southwest Airlines flies alone among the four biggest US carriers in hedging the cost of jet fuel. Its stubborn commitment to the policy is paying off as oil prices hover above $100 a barrel.
Hedging will save the company $1.2bn this year. With the coronavirus pandemic-battered airline industry returning to profitability, Southwest's operating margins will surpass its three major peers, according to Raymond James.
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Crypto and meme corporate bonds may follow their own path
Ellen Carr - Financial Times
The crash of some of the flagbearers of the equity bubble in recent years has been painful for investors. We have seen "pandemic winner" Netflix dive 75 per cent from 2021 peaks, crypto exchange operator Coinbase plunge 86 per cent and the one-time meme stock and cinema chain AMC lose 80 per cent.
Less noticed are the losses of their bonds. The damage wreaked there is more moderate and offset by coupon payments â a Netflix bond maturing in 2030 has returned a negative 19 per cent from recent peaks, a Coinbase 2031 bond negative 36 per cent and an AMC 2026 bond negative 19 per cent. Some of this is to do with the very different capital structures of the individual companies and risks of the bonds compared with equities.
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Funds trim bullish CBOT grain bets ahead of steep selloff
Karen Braun - Reuters
Market participants have been trying to anticipate the moment when speculators lose their appetite for Chicago-traded grains and oilseeds, and signs of that may have surfaced last week with a historic selloff in futures.
Investors have been lugging around sizable bullish grain bets for almost two years now, leaving the market susceptible to large price declines should funds change their minds.
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Three Arrows Capital crypto hedge fund defaults on Voyager loan
MacKenzie Sigalos and Arjun Kharpal - CNBC
Prominent crypto hedge fund Three Arrows Capital has defaulted on a loan worth more than $670 million. Digital asset brokerage Voyager Digital issued a notice on Monday morning, stating that the fund failed to repay a loan of $350 million in the U.S. dollar-pegged stablecoin, USDC, and 15,250 bitcoin, worth about $323 million at today's prices.
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More Hedge Funds Are Betting Against Tether as Crypto Melts Down
Vicky Ge Huang - WSJ
Short sellers have been ramping up their bets against tether, the world's largest stablecoin, amid a broad market selloff that has called into doubt the financial health of some crypto companies.
In the past month, more traditional hedge funds have executed trades to short tether through Genesis Global Trading Inc., one of the largest crypto brokerages for professional investors. These trades are worth "hundreds of millions" of dollars in notional value, said Leon Marshall, Genesis's head of institutional sales. He declined to be more specific.
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| | | | | | Exchanges | | | ESG at Cboe
Ed Tilly - Cboe
Environmental, Social and Governance risks and opportunities continue to grow as organizations disclose more about their business practices and demonstrate their values through action.
We are committed to empowering market participants of all types with the information, data and tools they need to navigate the next generation of risk.
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****JB: Also see the Cboe document on this ESG Report. (PDF)
France's approval of crypto exchange Binance branded 'incomprehensible' by MEP
Scott Chipolina and Akila Quinio - Financial Times
The French markets regulator is facing a backlash over its decision to approve crypto exchange Binance last month, with one European lawmaker describing the agency's decision as "incomprehensible".
Aurore Lalucq, French MEP and member of the European parliament's Committee on Economic and Monetary Affairs, has urged the Autorité des Marchés Financiers (AMF) to review its May ruling, which she said gave Binance a "guarantee of respectability".
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CME Group and Mayor Lightfoot Award Scholarships to 25 Star Scholars Moving Up to Four-Year Colleges and Universities
CME Group
CME Group, the world's leading derivatives marketplace, and Chicago Mayor Lori Lightfoot have awarded 25 associate graduates from City Colleges of Chicago with a $5,000 scholarship towards their four-year degree. For the sixth consecutive year, CME Group is recognizing the academic achievements of Star Scholars at City Colleges of Chicago, in step with its mission to advance equitable opportunities for talented students in Chicago.
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| | | | | | Strategy | | | Wall Street bear who called stock-market selloff sees S&P 500 up another 7% before turning lower
Joseph Adinolfi - MarketWatch
Morgan Stanley's Mike Wilson is one of Wall Street's most vocal bears. But even he thinks this bear-market rally has more room to run.
After the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite cemented their strongest weekly gains since at least May on Friday, Wilson â who is the chief U.S. equity strategist and chief investment officer at Morgan Stanley â told clients that there could be another 5% to 7% upside left to this latest bear-market bounce before U.S. stocks resume their downward trajectory.
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| | | | | | Events | | | FIA Forum: Frankfurt 2022
FIA
FIA returns to Frankfurt to address key issues impacting listed and cleared derivatives market participants in the region. Against the backdrop of ongoing market volatility and the march toward the Capital Markets Union, industry experts and regulators will explore regulatory developments, the renewed focus on data quality, improvements to industry operations, the emergence of new products to address the sustainable finance agenda, and the growth of crypto futures markets.
Join us for this one-day forum and connect with leading firms that are driving the growth and redefinition of the European cleared derivatives markets. Special pricing is available through 8 July
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| | | | | | Miscellaneous | | | Russia pushed into historic default by sanctions
Karin Strohecker, Andrea Shalal and Emily Chan - Reuters
Russia defaulted on its international bonds for the first time in more than a century, the White House said, as sweeping sanctions have effectively cut the country off from the global financial system, rendering its assets untouchable.
The Kremlin, which has the money to make payments thanks to oil and gas revenues, swiftly rejected the claims, and has accused the West of driving it into an artificial default.
/jlne.ws/3nnHjHQ
Meme Stocks Were Too Good to Robinhood
Matt Levine - Bloomberg
Robinhood's crazy week
Robinhood Markets Inc. is in the business of getting people to trade stock (and options, and cryptocurrencies) on their phones. The more people who sign up for accounts, and the more they trade, the happier Robinhood is. The way it makes money is that each time its customers trade stocks (or options, or cryptocurrencies), Robinhood sends their order to a market maker, and the market maker pays Robinhood a tiny fee for the right to execute the order. Unlike many other retail brokers, Robinhood charges these market makers a variable fee that is, roughly speaking, higher for very volatile stocks. 1 So the more people who sign up for Robinhood's service, and the more they trade, and the more volatile the stocks that they trade are, the more money Robinhood makes.
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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
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| | | Jeff Bergstrom
Editor
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