Breaking News

Mnuchin, Dalio Raise the Stakes for Treasuries Before ECB Meets; U.S. Stock Moves Mispriced Around Results on Taxes, JPM Says; Weakness in the Dollar Could Spell Trouble for Stocks

Lead Stories

Mnuchin, Dalio Raise the Stakes for Treasuries Before ECB Meets
Brian Chappatta – Bloomberg
A few hours in Davos just complicated things for bond traders betting central-bank policy shifts will drive Treasury yields higher.
First, Treasury Secretary Steven Mnuchin endorsed a weaker dollar on Wednesday, driving the euro to the strongest level versus the greenback since 2014. Then, hedge-fund manager Ray Dalio raised the specter of the most punishing bond bear market since the early 1980s, helping push U.S. yields back near three-year highs set this month.
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U.S. Stock Moves Mispriced Around Results on Taxes, JPM Says
Joanna Ossinger – Bloomberg
Keep a bias toward long volatility on U.S. stocks before their earnings reports, JPMorgan Chase & Co. says.
The options market is expecting earnings-related volatility to be roughly in line with the historical average, but a larger-than-normal risk premium is justified by “the important and idiosyncratic tax reform data point accompanying companies’ earnings reports,” JPMorgan strategists Shawn Quigg, Marko Kolanovic and Bram Kaplan wrote in a report Tuesday.
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Weakness in the Dollar Could Spell Trouble for Stocks
Anthony Mirhaydari – InvestorPlace
U.S. stocks finished mixed on Tuesday as relief over the reopening of the government has given way to new apprehension about looming budget and immigration talks. The debt ceiling looming large in late February has added fuel to the mix-up and increased the stakes.
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OCC Congratulates Powell on Confirmation as Fed Chair
OCC
OCC, the world’s largest equity derivatives clearing organization, today congratulated Jerome Powell upon his confirmation by the U.S. Senate to be Chairman of the Federal Reserve.
“OCC congratulates Jerome Powell on his confirmation as Fed Chair, and we look forward to working with him and the members and staff of the Federal Reserve on the key issues related to strengthening the level of confidence by investors and market participants in the U.S. financial markets, said Craig Donohue, OCC Executive Chairman and CEO.
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Natural Gas Futures Soar to 13-Month Highs on Frigid Winter Forecasts By Investing.com
Investing.com
Natural gas futures continued higher for the third day in a row on Wednesday, reaching their strongest level in more than a year, boosted by forecasts that call for frigid temperatures again in parts of the U.S. during early February.
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Exchanges and Clearing

FIA Releases Summary Statistics For 2017 Futures And Options Volume And Open Interest
Press Release
FIA today released summary statistics for annual trading activity in the global exchange-traded derivatives markets.
The number of futures and options that changed hands on exchanges around the world stayed roughly the same in 2017 as in 2016, according to FIA’s data. The total number of contracts traded in 2017 was 25.199 billion, down 0.1% from 25.220 billion in 2016.
There were variations by product types, however. Options volume globally was up 11.0%, while futures volume was down 6.6% on 2016. There were also variations in volume trends across different regions, with trading activity on exchanges in the Americas rising during 2017, but not enough to offset a decline in trading activity on exchanges in Europe and Asia-Pacific.
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Equity Index Highlights
Eurex Exchange
2017 was another year of new record highs in global equity markets supported by the recovery of the global economy and the ongoing expansive monetary policy by international central banks. Side by side with rising index levels, volatility levels in equity markets reached new record lows. The uncertainties about the outcome of the French elections in April and a possible escalation around the North Korean conflict in August have been the only two major events last year with substantial effect on volatility levels. Despite the record low levels, trading volumes in the European volatility benchmark VSTOXX showed considerable growth. Traded VSTOXX Futures & Options contracts volume increased by more than 50% y-o-y.
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Events

34th Annual Cboe Risk Management Conference U.S. 2018
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE) will host the 34th annual Cboe Risk Management Conference (RMC) U.S. from Wednesday, March 7 through Friday, March 9, 2018, at the Hyatt Regency Coconut Point in Bonita Springs, Florida.
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The OIC 2018 conference agenda is out:
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Miscellaneous

Davos: Blockchain can no longer be ignored
Martin Arnold – Swissinfo.ch
The world’s big financial institutions are wrestling with a cryptocurrency dilemma: whether to stand by and denounce a technology many distrust but also fear — or join those investing in it.
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Millennials are flocking to cryptocurrency and cannabis stocks, TD Ameritrade CEO says (AMTD)
Graham Rapier – Markets Insider
Millennials are leading an investment revolution. Now the largest demographic in the economy, young investors under 35 are catalyzing a transformation in the asset management and stock trading world.
Investment accounts opened by this demographic rose 72% annually, TD Ameritrade CEO Tim Hockey told Business Insider.
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A Look at Who Owns Bitcoin (Young Men), and Why (Lack of Trust)
Kailey Leinz – Bloomberg
Chances are, you’ve heard of Bitcoin. But the odds are much smaller that you actually have a stake in it.
Nearly 60 percent of Americans have heard or read about the world’s largest cryptocurrency, according to a joint SurveyMonkey and Global Blockchain Business Council poll of more than 5,700 adults conducted in January. But only 5 percent of people actually own the digital coin.
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About Author

Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.