Episode Transcript
[00:00:06] Welcome to the John Lothian News daily update podcast for August 19, 2024. I am your host, John Lothian. This podcast is brought to you by John Lothian News the home of markets wiki and markets wiki Education. Thank you for joining us. Here are the hits and takes comments from today's Yell end Hall of Fame member Dennis Murray passed away on August 17, according to industry sources and a funeral home webpage forwarded to JLN about Murrays passing. An email sent to colleagues said there was no one better.
[00:00:44] He was described by another member of FIA Operations division as one of a kind.
[00:00:51] FIA president and CEO Walt Lucan offered this statement from the FIA about Murray, FIA and its members mourn the death of Dennis Murray. Dennis was an influential member of the FIA Operations community and a founding member of the Futures Industry hall of Fame in 2005.
[00:01:14] Dennis was a beloved member of our industry and we will miss him dearly.
[00:01:21] John Dangard, the retired president of the FIA, offered this statement about Murray, who was very active in the organization during Dangard's tenure.
[00:01:33] One of the great gentlemen of our industry, smart, kind, and without any enemies. Truly someone who was loved and admired by everyone who knew him. We're going to miss you Dennis. I will never forget the contributions you made to this industry.
[00:01:52] We at JLN offer our sincere condolences to Murrays family, friends and industry colleagues. A water pipe break near the Jacques Cartier bridge caused significant flooding in downtown Montreal, close to the city's financial district, Bloomberg reported. The rupture sent a geyser of water into the air, flooding the area and affecting 100 homes. Electricity has been cut off and access to the flooded zone is restricted as emergency crews work to stop the leak, which could take up to half a day. Residents in affected areas have been advised not to drink tap water.
[00:02:36] On Friday, CBO Global Markets announced it has expanded its share repurchase authorization by $500 million and raised its quarterly dividend to share, marking the 14th consecutive year of dividend increases. The new dividend, up 15% from the previous quarter, will be paid on September 13, 2024, to shareholders of record as of August 30, 2024. As of July 31, 2024, $179.8 million remain under existing research authorizations, CBO said in its press release.
[00:03:20] Intercontinental Exchange, or ICE, announced that ICE and open have launched the NYSE Open Venture Capital Unicorn Index, a new benchmark tracking 50 large us based unicorn companies, privately held venture backed firms valued at over $1 billion. This index introduces a novel approach to valuing private companies, offering greater transparency and deeper insights into their performance I said. The collaboration between open, which provides pricing and reference data, and iCe, responsible for index calculation and administration, aims to bridge the gap between public and private markets, enhancing investor access to high growth private companies.
[00:04:15] Jen Sanci and Renato Mariotti of the law firm of Paul Hastings LLP have a livestream on Twitter and the latest episode is titled Prediction Markets under Fire. Is the CFTC going too far? You can watch it with a link on today's newsletter.
[00:04:36] It is the dog days of August in Ukraine, but a totally new way british supplied robo dogs have made their debut on the battlefield in Ukraine, marking a new development in the conflict during the dog days of August. But these Brit alliance dog or bad? Two units deployed by Ukraine's 28th Mechanized Brigade are equipped with advanced remote sensing technology and thermal infrared cameras. Capable of carrying over 7 supplies. These machines can navigate trenches and dense areas where drones cannot, operating for up to 5 hours at speeds of 9, Telegraph reported.
[00:05:29] Meanwhile, former Google CEO Eric Schmidt revealed that his involvement in the Ukraine conflict has turned him into a licensed arms dealer. Schmidt startup White Stork, co founded with udacity CEO Sebastian Thrun, aims to develop AI driven drones to support Ukraine in its fight against Russia. During an April lecture at Stanford University, Schmidt explained that witnessing the destruction in Ukraine motivated him to create these advanced, cost effective drones to help reduce the need for traditional ground battles. He emphasized that while his new role is unconventional, his goal is to leverage AI for Ukraine's defense. Insider reported.
[00:06:21] Applications are open for summer 2025 internships and full time roles in the NFA regulatory departments. There is a link in today's newsletter when JJLCO closed its offices in the Board of Trade building at the end of 2021, we put some office furniture, company records and technology into a storage facility in the western suburbs. I've decided to liquidate the furniture and technology and storage and give it away. I offered several computer screens and my local blocks app and then on a Facebook group for Elmhurst for free stuff. Most of the monitors are gone, but not all. I will also be giving away several rolling file cabinets and some other file cabinets. If you're interested in any of these, please let me know.
[00:07:15] Our most read stories from our previous edition of JLN options were panic over Vix fear gauge drops sharply as market mayhem abates from the Wall Street Journal Wall street just got its most volatile ETF as risky bets boom from Bloomberg Citadel's Ken Griffin has remade the hedge fund industry with himself on top. From the Wall Street Journal subscribe to the free JLN Options newsletter with a link in today's JLN here are more stories from the first read section of todays JLN. Heres a news story from JLN and video. Bitnomial strategic move expanding bitcoins futures with hash rate hedging binomial president Mike Dunn, in an interview with John Lothian, news shared the companys strategic vision and recent developments in the crypto derivatives market. Founded in 2014, Bitnomial has been at the forefront of creating a futures market for bitcoin, recognizing its potential as a commodity and the need for risk management tools in the volatile cryptocurrency space. Youll watch this video on johnlothiannews.com. heres a paper from the University of Edinburgh Business School the headline how does high frequency trading in the stock market affect liquidity? New research led by University of Edinburgh Business School has examined how high frequency trading in the stock market affects the liquidity of the options market. High frequency trading involves using advanced algorithms and high speed data networks to trade stocks quickly. And whilst HFTs aim to capitalize on tiny price discrepancies that exist for very short periods, they also play a role in providing liquidity to the market by being ready to buy and sell at any given moment. The study, led by doctor Kaladin Arzev, focuses on understanding how these rapid trading activities influence the bid offer spread in the options market. Bid ask spread is the difference between the price at which sellers are willing to sell and the price at which buyers are willing to buy. A key finding of this paper was that increased HFT activity in the stock market leads to wider bid ask spreads in the options market, making it more expensive for people to trade options. This happens for two main reasons. First, there is a latency arbitrage where aggressive hfts exploit time lags between the stock and options market to make profits. This forces options market makers to increase their spreads to protect themselves from potential losses. Second, when there is informed trading in the options market, we see a simultaneous increase in aggressive HFT activity in the stock markets and the bid ask bread in the options market.
[00:10:30] My comment fascinating article about the impact of HFT on stocks and options bid offers. How they are linked here's a story from CNBC. The headline egg prices are rising again as bird flu limits supply prices soared 19.1% in July compared with the same month a year ago, according to consumer price index data released last week. Egg prices are climbing, placing the household staple back in the spotlight as consumers stay concerned not only about inflation, but about the absolute level of prices. July marked our third straight month that egg prices rose on an annual basis, a reversal from a year of relative decreases. The culprit was a continued battle against the highly pathogenetic avian influenza, known in short, as hpai, or the bird flu. Prices for the vital food ingredients soared 19.1% in July, compared with the same month the year prior, according to the consumer Price index, or CPI, data released this week. By comparison, the entire CPI basket of items rose just 2.9% over the same period. My comment I have seen this show before. I did not like the ending. Here's another story, this one from Bloomberg. The headline big banks watched as con men wiped out a widow's life savings across the Hudson river valley. The trees were turning yellow and red when 83 year old Annette Mainz began showing up at JPMorgan Chase and company branches, draining them of cash. Her first try failed. The widowed social worker entered the bank's brick building in the college town of New Paltz and asked to withdraw $39,000 in $100 bills, more than the tellers could scrape together over a week. She returned to chase a few more times, taking a total of $169,000 out of her account. It was barely the start.
[00:12:46] My comment this is just atrocious. The minute an 85 year old woman shows up and asked for $39,000 and $100 bills, all kinds of red flags should go off and she should be offered help from the police, social services here's another story, this one from the New York Times. The headline how AI can help start small businesses entrepreneurs say the use of artificial intelligence for a variety of tasks is accelerating the path of hiring and, ideally, profitability.
[00:13:22] Sean Ameridi has been teaching a class on entrepreneurship for more than a decade. A professor at Carnegie Mellon University, Mister Amoretti has groups of mostly graduate students start businesses from scratch over the course of the spring semester. Some of the startups that his 49 students created this year were classic examples of the forum, a dating app for couples in long distance relationships, a personalized fitness app. But Mister Amoretti also noticed something unusual. I have a pretty good sense how fast the progress that students should make in a semester should be, he said. In 14 years, ive never seen students make the kind of progress that theyve made. This year, my AI is helping startups do things faster and cheaper. Sounds just like when PCs came around or electronic training.
[00:14:18] Here are the top three stories from Friday's GLN. Our most clicked story Friday was AI phones from Google and Apple will erode trust in everything, an opinion piece from Bloomberg. Second was regulatory penalties for global financial institutions surged 31% in the first half of 2024 from Finurgo. Third was a tie between list of unpaid internships available for at the SEC.
[00:14:48] And Citadel's Ken Griffin has remade the hedge fund industry with himself on top. From the wall Street Journal here are the top three stories from the lead section of today's JLN. The first story is from Bloomberg. The welcome to the end of the biggest commodity boom. After basking in the sunshine of higher prices, iron ore faces a blizzard. Oil, copper, soybeans and a handful of other monopolized this attention. But of all commodities, the humble lump of iron ore benefited the most from the chinese economic boom of the last 25 years. It was an astonishing bonanza. From the late 1990s to earlier this year, iron ore prices jumped nearly tenfold, more than any other major commodity traded volume tripled, australian commodity tycoons became billionaires, mining companies turned even briefly into Wall street darlings. And mighty legal battles broke for control of the last untipped mineral deposits. And now it's over. The greatest commodity boom thus far of the 21st century has ended. China inflated it, and China, too is bringing it down.
[00:16:08] Heres another story, this one from Bloomberg the headline wall street whiplash schools traders on fragile modern markets hurting dicey liquidity and systemic selling at pressure. ViX sees fast as ever spike recovery of at least 25 points. Greed has overcome fear on Wall street, and the market cataclysm that shook the world in recent weeks may well prove a mere blip on long term price charts. Yet the summer route will also go down as a particularly extreme example of a trend that shaped modern finance for years now. Increasingly frequent shocks blowing up with little warning. Here's another story, this one from the Financial Times. The headline Beijing restricts trading data as foreign investors flee chinese stocks foreign overseas flows into Chinas equity market have turned negative for the year after $12 billion exodus since the start of June. Chinese authorities have restricted a key source of data on inward investment as global funds continue to pull money out of the countrys stock market, threatening to make 2024 the first year of equity outflows on Monday, daily data showing the net investment flows from foreign funds into stocks in mainland China. So called northbound trades from Hong Kong via the stock Connect trading link was no longer available. Information on foreign stock holdings will instead be available quarterly.
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