| June 14, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | The Bear Market Is Officially Here. How You Could Still Profit Nicely Over Time.
Nicholas Jasinski - Barron's
The S&P 500 SPX - 0.35% is in a bear market. History says it will probably get worse before it gets better, but investors who dive in now could profit nicely in the long run.
With Monday's close at 3749.91, the index has completed a 20% decline from its recent peak. While it may be tough to look on the bright side when faced with another sea of red on their screens, an examination of past bear markets shows there is good news and bad news for investors once the S&P 500 has crossed that symbolic threshold.
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Stock market investors should prepare for more misery ahead as the S&P 500 officially enters a bear market, Bank of America says
Matthew Fox - Business Insider
Investors should prepare themselves for more "misery" ahead after the S&P 500 officially entered bear market territory on Monday, according to Bank of America.
The bank said in a Tuesday note that still-rising inflation and imminent interest rate hikes from the Federal Reserve are likely to drive continued volatility in stock prices. The Fed is expected to raise interest rates by 75 basis points on Wednesday, which is more than the prior expected rate hike of 50 basis points. The marked shift comes after Friday's hot CPI inflation report exceeded economist estimates and showed no signs of cooling off.
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Options traders bet on corporate bond breakdown
Tyler Bailey - CNBC
Recession fears that have plagued equity markets since the beginning of the year â and much more starkly in recent weeks â look to be spilling over into the bond market in earnest.
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Financial markets are 'fragile' ahead of Fed's decision as some traders and strategists see risk of an instant recession
Vivien Lou Chen - MarketWatch
Financial markets are on precarious footing since last Friday's surprise reading on accelerating U.S. inflation for May â with Treasurys, stocks, credit and currencies all exhibiting friction or tension ahead of the Federal Reserve's rate decision on Wednesday.
According to strategist Ben Emons and trader Tom di Galoma, the process of transmitting monetary policy through U.S. financial markets is hamstrung right now and there's a risk that higher-inflation expectations spiral and push the world's largest economy into "an instant recession." Even those who doesn't see that as a base-case scenario, like strategist Marc Chandler, said the "market might be tightening faster than what the Federal Reserve wants and faster than what the underlying economy can cope with."
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Nasdaq Bulls See Glimmer of Hope in Aggressive Fed
Ryan Vlastelica - Bloomberg
For technology-stock investors, a more aggressive Federal Reserve could be the best possible outcome from this week's meeting of central bank policy makers.
The Fed could send a signal to markets that it's determined to get inflation under control, and that might cool down the surge in U.S. Treasury yields, the benchmark for global borrowing costs, which climbed Monday to the highest since 2011.
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Watch NYSE President Sees a 'Ton of Liquidity' in the Market
Bloomberg (Video)
New York Stock Exchange President Lynn Martin says markets are performing "incredibly well" and advises retail investors to "invest for the long term." She speaks on "Bloomberg Markets: The Close."
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Stock Market 'Carnage' Set To Worsen As Fed Rate Decision LoomsâHere's How Bad It Could Get
Jonathan Ponciano - Forbes
As major indexes plunge into bear market territory, a growing number of experts are warning that key indicators suggest the latest stock selloff will only intensify before it subsides, especially if prolonged inflation keeps pushing the Federal Reserve to raise interest rates more aggressively.
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The Fed Has No Choice But to Let This Bond Market Tantrum Rip
John Authers - Bloomberg
There are ways of overcoming modesty. Central banks customarily go into self-imposed silence ahead of important monetary policy meetings. In Britain this is nicknamed "purdah," after the religious practice of separating women from men with a curtain. With the Federal Open Markets Committee due to meet Wednesday, there was no way policy makers could guide the market on how last week's awful inflation data for May had changed their plans. But somehow people got the gist.
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Surging oil prices show business cycle slowdown is inevitable
John Kemp - Reuters
Policymakers, economists and journalists often talk about the business cycle using the good-and-evil language of a fairy tale.
Booms are attributed to wise and enlightened policies while recessions are blamed on policy errors or the need to cleanse previous excess.
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| | | | | | Exchanges | | | BlockFills to list crypto derivatives products from CME Group
Wesley Bray - TheTrade
Digital asset financial services provider BlockFills has announced that it will list CME Group cryptocurrency derivatives products on its trading ecosystems.
The new offering will help institutions hedge against market volatility and looks to combat market access problems for institutions and professional traders - allowing them to benefit from margin efficiencies of trading cryptocurrency derivatives from CME Group alongside spot crypto and other digital instruments.
The offering will also enable BlockFills and CME Group customers to trade crypto derivatives at CME Group all within one account.
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Expansion of Listing Schedule for the Tuesday Weekly Options on E-mini Standard & Poor's 500 Stock Price Index Futures and the Thursday Weekly Options on E-mini Standard & Poor's 500 Stock Price Index Futures Contracts
CME Group
Effective Sunday, July 17, 2022, for trade date Monday, July 18, 2022, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. ("CME" or "Exchange") will expand the listing schedule for the Tuesday Weekly Options on E-mini Standard & Poor's 500 Stock Price Index Futures and Thursday Weekly Options on E-mini Standard & Poor's 500 Stock Price Index Futures contracts (the "Contracts") for trading on the CME Globex electronic trading platform ("CME Globex") and for submission of clearing via CME ClearPort, as more specifically described in the table below.
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US Payment for Order Flow Ban May Spur Retail Commissions, Cut Volumes
Fitch Ratings
Recent remarks by the SEC chairman outlining key topics being considered by the agency to adjust the structure of the U.S. stock market, including the reduction or ban of payment for order flow (PFOF), would likely be a near-term revenue headwind for retail brokers and a potential positive development for electronic market makers' operating margins, depending on the ultimate form of regulation and offsetting measures taken by market participants, Fitch Ratings says. However, any changes would likely be phased in over several years, as forthcoming proposals would be subject to a public comment period and will likely face continued pushback and legal challenges.
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| | | | | | Regulation & Enforcement | | | SEC Charges Former Employee of Online Gambling Company with Insider Trading; Software Engineer Traded, Tipped Friend of Company's Acquisition Plans
SEC
The Securities and Exchange Commission today announced insider trading charges against David Roda, a former software engineer at Penn National Gaming's subsidiary Penn Interactive Ventures, in connection with the parent company's $2 billion acquisition of Toronto-based Score Media and Gaming, Inc. The SEC's complaint, filed in federal district court in Philadelphia, alleges that, while employed at Penn Interactive, which provides online and mobile gambling experiences for Penn National, Roda was given confidential information about Penn National's interest in acquiring Score Media along with admonitions not to trade on that information. In breach of his duties, Roda purchased 500 out-of-the-money call options on Score Media in the weeks and days leading up to the announcement of the acquisition. Additionally, Roda tipped his longtime friend, Andrew Larkin, also charged by the SEC, who then purchased 375 Score Media shares. According to the SEC's complaint, Score Media's stock price increased nearly 80 percent after Penn National and Score Media publicly announced their deal, following which Roda and Larkin sold their holdings for unlawful profits of $560,762 and $5,602, respectively.
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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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The FIA is offering a webinar on Thursday, June 16 from 9:30 a.m. - 11:00 a.m. SGT called "The Road Ahead for Operations." Speakers will discuss the challenges of the current operational environment, including increased market volatility and stress to the infrastructure, the current landscape in the Asia-Pacific region, and the impact of new regulatory priorities and compliance requirements. The speakers are Amanda Boteler, Head of APAC Futures Clearing Operations, Citi; Julian Chesser, Managing Director, Head of APAC, Osttra; Nachi Muthu, Global Head of Derivative Products & Solutions, Broadridge; Mezhgan Qabool, ED, Head of Market Development APAC, and Head of Equity and Index Sales APAC, Eurex; and Tom Vo, Head of Listing & Trading Operations, Singapore Exchange. The webinar will be hosted by Bradley Fraser, Head of Prime Derivatives Services, Asia, at Barclays. For more information and to register, go here. ~SR
| | | | | | Miscellaneous | | | Market Rout Evokes Memories of Trading Before Lehman Blowup
Ye Xie, Isabelle Lee, Amelia Pollard, and Peyton Forte - Bloomberg
Quincy Krosby couldn't wait for Monday's trading session to be over.
"I was glued to the screen," LPL Financial's chief equity strategist said in an interview.
It was just one of those days with losses so gigantic that solely looking at stocks wasn't enough. Her eyes strayed to bonds, to credit default swaps and elsewhere as she tried to figure out how bad things were and might get.
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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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