| November 11, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Trading of futures and options on track to a record year - FIA
by Sarah Rudolph - John Lothian News
Trading of futures and options is on track to a record year, with higher levels of trading activity in many sectors, notably interest rate and equity index contracts, according to the FIA's Will Acworth, who went over the volume numbers for the first nine months of 2022 in a FIA webinar titled, "Q3 2022 Trends in Futures and Options Trading" Wednesday. On the other hand, Acworth said, trading of agriculture, energy and other commodity contracts is down from last year, with lower volume in commodity futures offsetting a rise in the trading of options on commodity futures.
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| | | | | | Lead Stories | | | Traders Swarmed 24-Hour Options As Nasdaq Skyrocketed
Gunjan Banerji - WSJ
Nineteen out of 20 of the most actively-traded options contracts in the U.S. market yesterday were set to expire within a day.
Many of these were tied to an S&P 500 ETF, Tesla or Amazon shares, according to Cboe Global Markets data. The heavy activity shows how activity in the shortest-dated options contracts is exploding, with many traders rushing to ride the market momentum or hedge their positions.
/jlne.ws/3A9TG0S
Cryptocurrency exchange FTX files for bankruptcy protection in US
Dan Milmo and Alex Hern - The Guardian
One of the world's biggest cryptocurrency exchanges, FTX, has filed for bankruptcy protection in the US amid warnings the embattled industry faces a 2008-style crisis.
FTX's founder, Sam Bankman-Fried, also resigned as chief executive after a precipitous fall from grace that began last week with reports about the financial structure of his crypto empire.
/jlne.ws/3DTyxsE
FOMO Grips China Traders in World's Wildest Stock Market
Ishika Mookerjee and Jeanny Yu - Bloomberg
The world's most gut-wrenching stock market reversal is becoming even more extreme as traders bet China's Covid Zero easing campaign has further to run.
Frenzied trading amid a fear of missing out on a rally has sent one measure of volatility in a key China stock gauge to the highest in the world, following weeks of turbulence that saw Xi Jinping's show of power at the October party congress and a spate of lockdowns amid rising Covid cases. Sparking optimism, authorities on Friday cut quarantine periods and scrapped flight bans in a pivotal shift, helping the Hang Seng China Enterprises Index cap its best two-week gain in more than seven years.
/jlne.ws/3UvvIVY
Day Traders Sold Stocks at Record Pace During Inflation-Fueled Rally
Lu Wang - Bloomberg
As US stocks surged to the best day in two years, one of the market's most reliable group of buyers was nowhere to be found.
Day traders dumped equities in droves, selling a net $2.65 billion in shares as the S&P 500 jumped more than 5%. The disposal was the most since JPMorgan Chase & Co. began tracking the flows five years ago based on public data on exchanges. The group also went bearish in the derivatives market via moves like buying put options, a tilt that prompted market makers to sell $1.6 billion of shares to avoid directional risk.
/jlne.ws/3GqIgdd
The Best-Case Scenario for Stocks Just Played Out As Inflation Cools.
Phil Rosen - Business Insider
The stock market just had its best day of the year. We can chalk that up to the Thursday morning inflation data that showed prices cooled faster than expected in October.
I'm not one to celebrate prices being 7.7% higher than a year ago, but that's certainly better than the 8.2% inflation we saw in September.
Turns out those Fed's interest rate hikes might just be working, at least a little bit â and investors are celebrating.
/jlne.ws/3fWe0vI
US inflation cools to lowest level since January
Colby Smith and Kate Duguid - Financial Times
The US inflation rate inched down in October, sparking a rally on Wall Street as expectations mounted that the Federal Reserve will increase interest rates by less next month than in recent meetings.
Annual consumer price growth slowed to 7.7 per cent, less than the 8 per cent expected by economists, to hit its lowest level since January. The closely followed "core" measure, which strips out volatile food and energy prices and is regarded as the best indicator for inflation's future trajectory, eased from a four-decade high.
/jlne.ws/3Gey8UN
Opinion: Bitcoin owners are bellyaching about its plunge, but the digital currency's volatility is no more extreme than that of stocks
Mark Hulbert - MarketWatch
Some bitcoin owners are complaining about the cruel and unfair twists of fate that have led the cryptocurrency to plunge in recent days.
In a five-day period from last weekend to its Wednesday low, as cryptocurrency exchange FTX unraveled, bitcoin BTCUSD, -6.20% fell nearly 30%. And that came on top of the huge loss it had suffered in the previous year. (Bitcoin bounced Thursday, but it's unclear whether that was just a so-called dead cat bounce.)
/jlne.ws/3E4x8Qp
| | | | | | Exchanges | | | FTX Crypto Exchange's Assets Frozen by Bahamas Securities Regulator
Lydia Beyoud, Annie Massa, and Yueqi Yang - Bloomberg
FTX.com had its assets frozen in the Bahamas, where the crypto exchange is based, as more signs emerged that mogul Sam Bankman-Fried's empire is crumbling.
The decision to freeze FTX Digital Markets was "the prudent course of action" to preserve assets and stabilize the company, the Bahamas Securities Commission said in a statement Thursday. An attorney has been appointed provisional liquidator -- an initial step in assessing whether a company is sound or should be liquidated.
/jlne.ws/3fWJVvZ
| | | | | | Regulation & Enforcement | | | The SEC Thinks Retail Traders Get a Raw Deal. Wall Street Disagrees.
Bill Alpert - Barron's
Wall Street is unhappy with a government plan to revamp how small investors' trades are done, and speakers at an industry conference slammed the proposal.
Securities and Exchange Commission Chair Gary Gensler has suggested that brokers send small orders to auction, instead of the prevailing practice of routing them to computerized market makers like Citadel Securities and Virtu Financial (ticker: VIRT). At a New York meeting of the Securities Industry and Financial Markets Association Thursday, panelists from all sides of Wall Street condemned the auction idea.
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FIA asks FERC to limit scope of communications rule
FIA
FIA has offered comments to the US Federal Regulatory Commission (FERC) regarding a proposed rulemaking that would substantially expand the scope of communications that are subject to FERC's enforcement authority.
In its comments, FIA acknowledges the importance of truthful and forthright communications with federal agencies, including FERC. However, FIA notes that FERC's proposed framework for applying a "duty of candor" to nearly all communications with FERC and FERC-regulated entities may have unintended negative consequences for FIA's members and other market participants that are active in physical derivatives markets regulated by the Commodity Futures Trading Commission. FIA's comments question whether FERC intended its rule to apply so broadly and urges FERC to incorporate limiting principles that are standard in other federal authorities' rules governing communications - such as intent and materiality - if it moves forward with a final rulemaking.
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CFTC Approves a Proposed Rule and a Proposed Order and Request for Comment
CFTC
Today, the Commodity Futures Trading Commission voted to advance two proposals. The first is a proposed rule on reporting and information requirements for derivatives clearing organizations (DCOs). The second is a proposed order and a request for comment on an application for a capital comparability determination submitted on behalf of nonbank swap dealers subject to regulation by the Mexican Comision Nacional Bancaria y de Valores.
/jlne.ws/3huEBjY
| | | | | | Strategy | | | Stock Options to Trade With 18-Year Track Record of Income: Goldman
Morgan Chittum - Business Insider
On Thursday, stocks soared after key consumer price data indicated inflation levels may have peaked.
The consumer price index rose 7.7% in the year through October, weaker than economists had forecast, according to the Labor Department. Both the Dow Jones Industrial Average and the S&P 500 notched their biggest one-day rallies since 2020 on the news.
/jlne.ws/3fWqLXf
'Real big sigh of relief': Stock, bond ETFs jump on inflation report while investors eye equal-weighted strategies
Christine Idzelis - MarketWatch
Tumultuous markets got some relief Thursday after fresh inflation data pointed to an easing in the surging cost of living in the U.S., sending equity and bond exchange-traded funds higher.
"It was a good number," said Doug Fincher, a portfolio manager at Ionic Capital Management, in a phone interview. "A real big sigh of relief."
/jlne.ws/3UvEFi2
| | | | | | Miscellaneous | | | You need to understand the FTX debacle even if you have no investments in crypto
Philip van Doorn - MarketWatch
The sudden collapse of FTX, the world's third-largest cryptocurrency exchange, underlines how important it is for any investor to learn about the risks taken when money is parked with a lightly regulated firm.
FTX and affiliate companies filed for bankruptcy Nov. 11. Sam Bankman-Fried resigned his position as CEO and was replaced by John J. Ray III, a lawyer who has worked on the bankruptcies of Enron, Nortel Networks and many other companies.
/jlne.ws/3WXInCA
FTX, Adam Neumann, Mark Zuckerberg and the Cult of the Founder
Max Chafkin - Bloomberg
Mark Zuckerberg appeared on his employees' computer screens this week and said, with an expression that seemed calibrated to convey the deepest possible pain, that he was sorry for laying off 11,000 of them. "I just want to say up front that I take full responsibility for this decision," said the co-founder and chief executive officer of Meta Platforms Inc.
On one hand, this was pretty upstanding of him. We've gotten so used to our tech overlords acting like overfed babies, whose only motivation is their own misplaced sense of victimhood, that it was refreshing to see Zuckerberg just say sorry. On the other, it was a reflection of just how compromised the Facebook company has become â and the extent to which its struggles come down to a single point of failure: the blind faith investors put in the abilities of founder-CEOs.
/jlne.ws/3G9zwHW
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