Episode Transcript
[00:00:06] Welcome to the John Lothian News Daily Update podcast for October 23, 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 GLN Amid the reporting about the death of Sir Bryan Williamson, News emerged that his former Life colleague Hugh Friedberg had passed away in August. Friedberg served as CEO of Life from 1998 to 2009 and he played a key role in negotiating the deal for Life to be acquired by Euronext in 2001. He worked side by side with Sir Brian to revitalize Life and under his leadership the Life Connect trading platform was developed. Friedberg left the industry on May 1, 2012 when he retired from his role as chairman of NYSE Life. There was only one death notice online I could find and it was very vague. Following the tradition of his Jewish faith, he was quickly buried after his death and I saw no notices shared about his passing. At the time, I asked ICE Chairman and CEO Jeffrey Sprecher for a comment about Williamson's and Friedberg's passing. Here is Mr. Sprecker's comment.
[00:01:40] Ice was extremely sad to hear of the passing of Sir Brian Williamson and Hugh Friedberg as Chairman and CEO of Life, respectively. They transformed Life from a member mutual open outcry market into an electronic, internationally distributed platform and in doing so they saved Life as an exchange. Without their leadership and vision, Life may not have survived. We are proud to say that their legacy, along with their spirit of innovation and enterprise live on in ISIS financial derivatives markets.
[00:02:20] CME Group today reported all time record revenue of $1.6 billion for the third quarter of 2024 alongside record adjusted operating income, net income and earnings per share. In its reported financial Results for the third quarter of 2024, the Company achieved a record quarterly average daily volume or ADV of 28.3 million contracts, with growth across all asset classes. Financial product volumes surged by 28%, driven by a 36% increase in interest rate products, including record ADVs in sulfur futures and Treasuries. International ADV also hit a record with strong growth in EMEA up 30% and Asia up 28%. In his October 2024 article for Intercontinental Exchange or ICE, ICE global head of oil market research Mike Witner explains the key differences between ICE Brent and NYMEX WTI futures. Brent is a waterborne global crude benchmark with flexible logistics and storage options that make it less prone to price volatility, including the negative prices seen with WTI in April 2020. WTI, a landlocked crude stored in Cushing, Oklahoma, faces storage constraints and is more sensitive to regional supply and demand, often leading to more extreme price swings. Brent's global reach, storage capacity and flexibility make it more stable, offering lower volatility and typically better role yields compared to wti. You can read the article with the link in today's newsletter.
[00:04:26] Reuters is reporting that ahead of the 2024 US presidential election, banks, brokerages and exchanges are ramping up staffing and preparing systems to handle expected market volatility and increased trading volumes. With concerns over a potentially delayed or contested election, Kamala Harris and Donald Trump firms are preparing for uncertainty similar to previous events like Brexit and the 2016 election. Institutions are bolstering overnight teams, adjusting staffing schedules and testing systems to ensure they can manage surges in trading and investor inquiries. As volatility is anticipated to rise significantly around Election Day, ICE has released its first look at September 2024 mortgage data and it shows in September 2024, mortgage delinquencies rose, with the national delinquency rate increasing to 3.48%, a 4.3% month over month and 5.7% year over year rise. This marks the fourth consecutive year over year increase in delinquencies, the longest stretch since early excluding the COVID 19 period. Serious delinquencies, that's 90 plus days past due, reached a 16 month high, while 30 to 60 day delinquencies also rose. Despite this, foreclosure activity remained muted with fewer starts and completions. Pre made prepayment activity hit a two year high, rising 2.5% month over month and 43.2% year over year. In his remarks at the Bloomberg Global Regulatory Forum, SEC Chairman Gary Gensler emphasized the critical role of US Capital markets and non bank finance in driving economic growth. He highlighted the size and importance of the $120 trillion markets, which are five times larger than the banking sector, noting that they provide competition, efficiency and transparency. Gensler outlined three key points the benefit of a large, diverse capital market, the competition non bank finance offers to traditional banks, and the need to focus on specific activities that contribute to finance fragility. He stressed the importance of promoting financial resilience and safeguarding against systemic risks such as those posed by money market funds and the treasury and credit markets, while also acknowledging the vital roles these sectors play in ensuring economic stability and liquidity. Northern Trust's third annual Charity Trading Day held on October 16, 2024 raised $1 million for four charities, Habitat for Humanity International, Rise Against Hunger, Ronald McDonald House Charities and Urban Initiatives. This global event, part of Northern Trust's philanthropic focus on health care, housing, education and food security, saw employees from trading operations and client services across its global offices participate. Since its inception in 2022, the initiative has raised over $2.5 million. The event is a key of Northern Trust's broader community investment strategy during its Global Volunteerism Month. Achieving Greater Together blockfilz has appointed Amy Shelley as Chief Financial Officer and promoted Neal Van Hughes as Chief Strategy Officer as the firm prepares for international expansion and product diversification.
[00:08:44] On SquawkBox on CNBC, Andrew Ross Sorkin interviewed Paul Tudor Jones, founder and CIO of Tudor Investment Corporation and a founder of the Robin Hood foundation, and discussed the 2024 presidential election, the state of the economy, how to fix the federal deficit and the Robinhood Investors Conference, and more. Tudor Jones made a very analytical explanation about the debt problems of the US Government and how it needed to let the Trump tax cuts lapse and make other difficult changes to deal with the debt.
[00:09:24] Here are the headlines from in front of Fow's paywall From some recent stories Eurex participates in ECB distributed ledger technology analysis to expand Dunaway options in US Treasury's Clearing HKE act cites China sentiment shift for 6% revenue boost and Ion reports smaller trading firms eyeing FMX futures Fernando Venezuela the legendary Mexican born pitcher for the Los Angeles Dodgers who sparked Fernando mania and won both the NL Cy Young Award and Rookie of the year in 1981, has died at the age of 63, the Associated Press reported. He passed away Tuesday night in a Los Angeles hospital with the Dodgers set to honor him during the upcoming World Series at Dodger Stadium against the New York Yankees.
[00:10:28] Someone stole the yard sign just below my front office window of my home that reads A Just world for all and has the rainbow colors on it. Normally I am working in that office too many hours a day so there would be no opportunity for such mischief. However, I am down in Florida.
[00:10:48] Our most read stories from our previous edition of JLN Options were Volatility Hedge fund QVR takes aim at JP Morgan Options Whale from Bloomberg SGX FX aims to grow electronic FX options trading from market to media and Bitcoin Options Traders eye $80,000 no matter who wins US election from Bloomberg subscribe to the free JLN Options newsletter with a link in today's jln. Here are more stories from the first Read section of today's JLN Here's a story from Bloomberg the headline CFTC to police electing betting platforms Chair Benham says agency is fighting in court to halt politics based derivatives Kalshi Polymarket are seeing increased interest from traders.
[00:11:42] The U.S. commodity futures trading Commission will police registered political derivatives markets despite its best efforts to kill them, agency Chairman Rostam Benham said during a Tuesday interview with Bloomberg Television. The futures and swaps regulator finds itself having to serve as what Benham likens to an elections cop, even as it wages a court fight with Kauchi Inc. In exchange that lets Americans bet on election outcomes. We'll pursue any action as we do in any part of our markets, benham said. He added that the agency is still litigating an appeal of a September court decision allowing Kelshi's political prediction market contracts to move forward.
[00:12:33] My comment if you look at the numbers and the players, you would want to cop on the block. You would want a platoon of cops with a parade of paddy wagons at the ready.
[00:12:44] Here's another story, this one from Bloomberg. EQT Chair says geopolitics is number one Worry not Higher rates Connie Johnson speaks at firms US Capital markets event Johnson says EQT not looking to just become big asset gatherer EQTAB Chairman Connie Johnson says geopolitical tensions in the world right now are a much bigger concern for his business than the issue of higher borrowing costs. The risks that I am most concerned about are the geopolitical risks, unquote, johnson said during a fireside chat with Bloomberg News. At the Swedish investment firm's first U.S. capital markets event in New York on Tuesday, Johnson said it was easy to paint a quote, very negative geopolitical scenario in which the whole logic for trade and international cooperation goes away. This, he said, would prove more of a challenge for the private equity industry than what it experienced through the COVID 19 pandemic or with higher interest rates. My comment Geopolitical concerns are the number one worry. I hope Johnson reads JLN here's another story, this one from the New York Times. The headline Donald Trump's ex chief of staff John Kelly says he is a fascist and would govern as a dictator. Four star US General John Kelly claims were reported in blockbuster comments to the New York Times.
[00:14:30] Donald Trump's longest serving White House chief of staff has said the former president is a fascist who has spoken admiringly of Adolf Hitler and would seek to govern as a dictator. According to new reports, John Kelly, a retired four star general who was Trump's homeland Security chief and later ran his White House made the comments in interviews published by the New York Times late on Tuesday. My comment Retired four star General John Kelly does not have a book to sell. He is not trying to get a job on a TV network. He is sharing his opinions and personal up close experiences with Donald Trump from having served as his Homeland Security chief and then later as his White House Chief of Staff.
[00:15:20] Here are the top three stories from Tuesday's jln. Our top story Tuesday was Sir Brian Williamson an appreciation from Exchange invest via LinkedIn. The second most read story was a video of Howard Lutnick on Fox Business with Larry Kudlow via YouTube. Third was how Susquehanna's Jeff Yass mastered the options game from the Financial Times. Here are the top three stories from the lead section of today's jln. The first story is from Bloomberg. The headline Gensler Sees potential peril in $13 trillion of eurodollars Wall street top cop is sounding an alarm about the Eurodollar market's potential to foment instability in global economies, and he's renewed warnings about risks embedded in private credit and artificial intelligence. Much of the $13 trillion of US currency held offshore by non US banks is uninsured, securities and Exchange Commission Gary Gensler said Thursday during the Bloomberg Global Regulatory Forum in New York. This matters because Eurodollar markets have played a role in deepening economic downturns across the globe, he said, including the 2008 financial crisis, quote There may be more work for those of us in the global regulatory community to ensure resiliency in the offshore Eurodollar markets, quote Gensler said.
[00:17:02] Here's another story, this one from Bloomberg. The headline CFTC Chief sees agencies stretched thin by Election Bets Crypto the US Commodity Futures Trading Commission is at an inflection point, quote unquote, after a court decision legalized contracts that allow speculators to bet on election outcomes, Chairman Rossum Benham said in a Bloomberg television interview. The agency intends to comply with the court's decision and regulate trading on those derivatives contracts even as it appeals the ruling and upholds that such enforcement isn't within the agency's authority, he said. The contracts will continue to grow and we will have to monitor them closely, benham said. And then finally, here's another story from Bloomberg. The headline Banks are dumping exposure onto investors and posing risk to financial stability. IMF says leverage on SRTs could create negative feedback loops. For now, asset pools seem to be of high quality. IMF concerns around the quality of assets being bundled into significant risk transfer are rising among market participants and the opaque transaction could increase risks of financial stability. According to the International Monetary Fund, SRT is one of the hottest trades on Wall street could create negative feedback loops during periods of stress because if leverage is used by buyers, then substantial risk remains within the banking system, but capital coverage is lower, the IMF said in a report on financial stability. The transfers may also mask a traditional lender's resiliency because they improve a bank's buffers while leaving the overall capital level unchanged. We're grateful for your attentive listening to the John Lothian News Daily Update. Please spread the word about our podcast among your friends. We would greatly appreciate it if you could spare a moment to leave a review on Apple Podcasts or whatever platform upon which you access this podcast. Your reviews play a crucial role in introducing our content to new listeners. Also, if you haven't subscribed to the daily John Lothian Newsletter email yet, you can Enjoy a complimentary 90 day trial by visiting johnlothianews.com trial. Thank you for your valued support. Have a great day and stay safe and treat people the same way you want to be treated with respect, equality and justice. This has been John Lothian Goodbye.
[00:19:56] This podcast has been produced by Andrew Lovia.
