Volatility – Lost Worlds http://lost-worlds.com/ Fri, 11 Jun 2021 10:54:33 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 https://lost-worlds.com/wp-content/uploads/2021/05/cropped-icon-32x32.png Volatility – Lost Worlds http://lost-worlds.com/ 32 32 Orphazyme ignores the reasons for stock volatility https://lost-worlds.com/orphazyme-ignores-the-reasons-for-stock-volatility/ https://lost-worlds.com/orphazyme-ignores-the-reasons-for-stock-volatility/#respond Fri, 11 Jun 2021 10:36:00 +0000 https://lost-worlds.com/orphazyme-ignores-the-reasons-for-stock-volatility/

By Chris Wack

Orphazyme AS said US custodian stocks representing its common stock on the Nasdaq have experienced extreme price and trading volume volatility since Thursday.

The biopharmaceutical company said it was not aware of any material changes in its clinical development programs, financial condition or operating results that would explain the price volatility or volume of transactions that has occurred. .

The stock is down 57% to $ 9.08 in pre-trade, after closing Thursday’s session up 300%. Pre-market volume was 909,000 shares at 6:30 am ET, while the share has an average volume of 183,000 shares in 65.

Orphazyme said investors who buy the company’s ADSs or shares can lose a significant portion of their investments if the price of those securities subsequently drops.

Orphazyme’s applications for arimoclomol for Niemann-Pick disease type C are under priority review with the United States Food and Drug Administration, with an expected action date under the Prescription Drug. User Fee Act on June 17, as well as with the European Medicines Agency, with an opinion from the Committee for Medicinal Products for Human Use expected later this year.

Write to Chris Wack at chris.wack@wsj.com

]]> https://lost-worlds.com/orphazyme-ignores-the-reasons-for-stock-volatility/feed/ 0 Here’s why Bitcoin stocks were volatile this week https://lost-worlds.com/heres-why-bitcoin-stocks-were-volatile-this-week/ https://lost-worlds.com/heres-why-bitcoin-stocks-were-volatile-this-week/#respond Thu, 10 Jun 2021 20:41:11 +0000 https://lost-worlds.com/heres-why-bitcoin-stocks-were-volatile-this-week/

What happened

There were two major stories for the popular cryptocurrency Bitcoin (CRYPTO: BTC) over the past week, causing disparate market reactions. On Monday, the Justice Department announced that it had seized Bitcoin obtained during a ransomware attack. This caused Bitcoin to fall because investors started to wonder how secure Bitcoin really is. But on Tuesday, El Salvador voted to make Bitcoin legal tender. This was seen as a big development for the long-term adoption of Bitcoin, sending coins higher.

In total, Bitcoin has only risen by around 1% since the start of the week. But it was a volatile race to get there.

Shareholders are already well aware, but Bitcoin stocks can trade as volatile as Bitcoin itself. All of those stocks have skyrocketed during the week. But since Thursday afternoon, CleanSpark (NASDAQ: CLSK) the stock was up 13% for the week. Marathon Digital Holdings (NASDAQ: MARA) and Osprey Bitcoin Trust (OTC: OBTC) also increased by 9% and 8%, respectively. On the other hand, Canaan (NASDAQ: CAN) the stock was down almost 15%.

Image source: Getty Images.

So what

To highlight how volatile Bitcoin stocks can be, consider that only one of these companies (CleanSpark) released any news during the week. None have filed anything with the Securities and Exchange Commission. In addition, no prominent Wall Street analyst has weighed on stocks and caused the price per share to fluctuate. These stocks have all made big moves without any company specific news other than the fluctuating price of Bitcoin.

As mentioned, only CleanSpark had news during the week. It happened on the afternoon of June 7 – ironically, the stock’s least volatile trading day.

CleanSpark management made an appearance at Water Tower Research Fireside Chat. During the presentation, Executive Chairman Matt Schultz announced that he had just learned that the CleanSpark share would be included in the Russell 2000 Index. For this reason, Shultz said his data suggests that 4.7 million and 5.9 million CleanSpark shares will be purchased for exchange-traded funds (ETFs) and index funds by June 25. This interesting development might help explain why CleanSpark was up for the week.

Having said that, I would expect CleanSpark, Marathon Digital, and Canaan to move with the price of Bitcoin as it is the most fundamental part of their business. For example, a higher price for Bitcoin encourages more mining activity, requiring more mining equipment. Canaan is supplying this equipment and sales have recently resumed. The company generated more than $ 61 million in revenue in the first quarter of 2021, more than ten times more than the previous quarter.

As sales pick up for Canaan, there is still a lot of uncertainty. The company released first quarter results on June 1, noting that it was not giving forward guidance due to the fluctuation in the price of Bitcoin. However, a representative clarified via email the next day that Canaan management expects to generate between $ 150 million and $ 250 million in revenue in the second quarter. This is an astonishing rate of growth that investors should take note of. However, this is also an extremely wide range of revenue forecasts, highlighting how unknown this business is yet given the fluctuations in the price of Bitcoin.

The price of Bitcoin is also a big issue for Marathon Digital. Not only is the company mining Bitcoin, it has also bought Bitcoin and owns all the Bitcoin it is mining. As of June 2, he held 5,518 bitcoins. With Bitcoin trading at around $ 36,600 at the time of writing, these bitcoins are valued at over $ 200 million, or roughly 7.5% of its market cap – a sizable number.

Stacks of gold coins display a symbol representing Bitcoin.

Image source: Getty Images.

Now what

CleanSpark also offers products in the sustainable energy sector, so its long-term fate is not completely tied to that of Bitcoin. However, if you are investing in Canaan or Marathon Digital for the long term, you are relying on two things. First of all, you rely on Bitcoin to go up. Second, you rely on them to create shareholder value by running good companies. But the price of Bitcoin is the most important factor – a well-run Bitcoin business is not a compelling investment when the price of Bitcoin skyrockets.

For this reason, investing more directly in Bitcoin may be a better way to invest in this space. You can do this relatively easily through a cryptocurrency exchange or with a fund like Osprey Bitcoin Trust. Osprey only holds Bitcoin. The only problem sometimes is that stocks trade at a premium to the underlying Bitcoin assets – currently the premium is around 19%.

Once Osprey Bitcoin Trust trades closer to its net asset value, it can be a good way to invest in Bitcoin. If you think Bitcoin is going up, you can profit from it without taking on the operational risks associated with owning shares in other companies.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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Affle buys Jampp mobile DSP as market volatility further stimulates mobile ad technology mergers and acquisitions https://lost-worlds.com/affle-buys-jampp-mobile-dsp-as-market-volatility-further-stimulates-mobile-ad-technology-mergers-and-acquisitions/ https://lost-worlds.com/affle-buys-jampp-mobile-dsp-as-market-volatility-further-stimulates-mobile-ad-technology-mergers-and-acquisitions/#respond Thu, 10 Jun 2021 04:35:07 +0000 https://lost-worlds.com/affle-buys-jampp-mobile-dsp-as-market-volatility-further-stimulates-mobile-ad-technology-mergers-and-acquisitions/

The Jampp demand-side mobile platform was acquired by Affle on Wednesday. It is a mobile marketing company present in India and Singapore.

There’s nothing like a little uncertainty (ahem, Apple) to trigger mergers and acquisitions.

The mobile advertising industry has seen a massive wave of consolidation following privacy-related platform changes.

Since February, AppLovin has acquired Adjust, Digital Turbine has bought AdColony followed by Fyber, Zynga has taken over Chartboost, and Vungle has taken over GameRefinery and TreSensa. (Vungle also bought AlgoLift in October of last year.)

“One of the main reasons for joining forces is to be able to tackle the problems of app advertisers from different angles and to have a broader product set to help them throughout the lifecycle of applications. user, ”said Diego Meller, co-CEO and co-founder of Jampp, which was among the last independent mobile DSPs in the market.

“A lot of the consolidation we’ve seen recently was about… finding multiple pieces of the puzzle,” he said.

In Jampp’s case, Meller said, its technology is complementary to Affle, which offers a suite of products for marketers with tools to help with user acquisition, brand marketing, retargeting and detection of advertising fraud. Affle also provides data and ad monetization services to publishers.

Meller said Jampp is bringing technology Affle doesn’t yet have in its portfolio, in the form of a programmatic user acquisition platform.

Jampp is also present in countries where Affle does not have a presence, such as Latin America and North America – and vice versa. Although Jampp has a small office in Singapore, it doesn’t yet have much of a footprint in Asia-Pacific, which is Affle’s home base.

Although Jampp and Affle are both strong in regions with high Android density, Jampp’s activities in North America give it a glimpse into the iOS ecosystem, which has been shaken by changes to Apple’s AppTrackingTransparency. .

“There are many different ways we can help each other,” Meller said.

And that was true even before the deal was officially done. Meller and Anuj Khanna Sohum, CEO and Chairman of Affle, finalized the acquisition across time zones without ever meeting in person, which is emblematic of the art of making deals during a global pandemic.

Although Jampp declined to share a sale price, the company has grown organically from its one and only funding round, Meller said. In 2015, he raised $ 7 million in Series A funding.

Jampp, which employs 96 people, will continue to operate as an independent entity within Affle.

Affle has been listed on the National Stock Exchange and the ESB (formerly Bombay Stock Exchange) in India since 2019.

Including Jampp, Affle has acquired nine companies since 2012, including omnichannel marketing platform Vizury in 2018 and app marketing and recommendation platform Appnext last year.

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OptionMetrics announces IvyDB Europe 3.0 with extended volatility surface for pricing weekly options and popular trading strategies https://lost-worlds.com/optionmetrics-announces-ivydb-europe-3-0-with-extended-volatility-surface-for-pricing-weekly-options-and-popular-trading-strategies/ https://lost-worlds.com/optionmetrics-announces-ivydb-europe-3-0-with-extended-volatility-surface-for-pricing-weekly-options-and-popular-trading-strategies/#respond Wed, 09 Jun 2021 12:05:00 +0000 https://lost-worlds.com/optionmetrics-announces-ivydb-europe-3-0-with-extended-volatility-surface-for-pricing-weekly-options-and-popular-trading-strategies/

NEW YORK–(COMMERCIAL THREAD) –OptionMetrics, an options database and analytics provider for institutional investors and academic researchers around the world, publishes OptionMetrics IvyDB Europe 3.0. The update offers new features for institutional and academic investors to assess extreme volatility and complex trading strategies. The main advances include extending the volatility surface for the underlying securities and increasing the calculated maximum implied volatility of the option.

One of the most important updates to IvyDB Europe 3.0 is the expansion of the volatility surface to include a 10 day maturity curve as well as a new call and set the delta grid points to 10, 15, 85 and 90 (extending the curve to 10-90 from 20-80). The extended surface allows institutional investors to see more points deep in and out of money when evaluating short- and long-term strategies, such as those surrounding high volatility, memes stocks and weekly options.

In addition, the maximum implied volatility threshold has been raised to 900% to allow investors to identify extremely volatile options and high-priced premiums, such as Nokia and other European stocks reaching over 800% at most. strong of their commercial frenzy this year. . Options with extremely high volatility are intentionally excluded from the volatility surface calculations.

OptionMetrics also makes the calculation of volatility prices and pattern changes consistent with those of IvyDB US 5.0 for even easier comparison between databases. Specific updates include:

  • More option contract specification data, with the addition of AM settlement, contract size and expiration indicator fields in the option price and option price tables, allowing users easily view contract specifications in one place.

  • More sophisticated mapping of option identifiers / prices for trading securities on multiple stock exchanges or in more than one currency.

  • Improved data quality, with historical fixes and recalculations based on the above.

“With our most recent version of IvyDB Europe, we continue to expand our mission of providing the most accurate, high-quality options data to meet the evolving needs of our customers. IvyDB Europe 3.0 thoughtfully takes into account the complexities of European options and trading and also expands the amount of analysis provided to universities and institutional investors to assess short and long term opportunities in evolving markets ”, a declared CEO of OptionMetrics David Hait, Ph.D.

IvyDB Europe covers over 972 option titles, from all major European stock exchanges including UK, France, Germany, Switzerland, Netherlands, Sweden, Belgium, Spain and Italy. Historical data and daily updates are available for most securities since January 2002. In addition to daily option price information, it includes dividend projections and historical distributions and transactions, such as spinoffs. , mergers and name changes.

OptionMetrics also has databases for US, Asia-Pacific, Canada, Global Indices, and Futures.

Email info@optionmetrics.com for more details.

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Let’s dive into volatility; USD Rangebound because US yields are stable; Inflation data in the United States on Thursday https://lost-worlds.com/lets-dive-into-volatility-usd-rangebound-because-us-yields-are-stable-inflation-data-in-the-united-states-on-thursday/ https://lost-worlds.com/lets-dive-into-volatility-usd-rangebound-because-us-yields-are-stable-inflation-data-in-the-united-states-on-thursday/#respond Tue, 08 Jun 2021 16:59:23 +0000 https://lost-worlds.com/lets-dive-into-volatility-usd-rangebound-because-us-yields-are-stable-inflation-data-in-the-united-states-on-thursday/

Market minutes overview:

  • Measured at a base on March 8, exactly three months ago, the VIX, OVX, MOVE, and GVZ have all contracted to double digits; the VIX and MOVE are offset by more than -30% each.
  • United States Dollar which for the moment lacks an important engine. Yields on U.S. Treasuries have moved sideways for almost two months, and it now looks like inflation expectations to have started to settle down too.
  • Aaccelerating price pressures still may not do much to shake things up for the FOMC in the wake of the May report on the non-farm payroll in the United States. Having said that, it seems that the cone talk is about to escalate as inflation readings peak.

Is there anyone there?

The markets are calm. Maybe too calm. Stocks are hovering near their highs and some technical evidence is starting to accumulate over shorter time frames as bearish momentum begins to build. But with several inflation reports expected over the next few days – from China, Mexico, the United States – as well as decisions from the Bank of Canada and the European Central Bank, it looks like the summer lull. “Historically standard” before a wave of significant event risk.

GVZ, MOVE, OVX and VIX technical analysis: daily price chart (March 8 to June 8, 2021) (Chart 1)

The summer doldrums seem to be here after all. Measures of volatility are collapsing across the board. Measured on a March 8 basis, exactly three months ago, the VIX (volatility of stocks), OVX (volatility of oil), MOVE (volatility of treasury bills) and GVZ (volatility of gold ) all contracted to double digits; the VIX and MOVE are offset by more than -30% each.

Video technical notes: DXY index

  • The DXY index continues to hold below the former bearish flag support that defined price action from late November 2020. Momentum continues to neutralize, with the pair intertwined between the daily 5, 8, 13 and 21 EMA envelopes, which is still neither in bearish nor bullish sequential order. Daily MACD is rising while below its signal line, and the daily slow stochastic turns lower but stay above their midline. Price action expected to remain limited ahead of Thursday’s ECB meeting taking into account the euro weighting of 57.6% (unless a “leak” via a privileged media like Reuters).

A thread goes through

The major constituents of the DXY Index – the British Pound, the Euro and the Japanese Yen – have something to do with common: the US dollar component (of EUR / USD, GBP / USD and USD / JPY rates) one important motor is missing at the moment. Yields on US Treasuries have moved sideways for almost two months, and it now appears that inflation expectations (as measured by the 10-year break-even point) have also started to stabilize. The net result was that US real yields got stuck in negative territory and moved sideways as well.

US Treasury yield curve (1 to 30 years) (June 2020 to June 2021) (Chart 2)

Market minutes: drops in volatility;  USD Rangebound because US yields are stable;  Inflation data in the United States on Thursday

US inflation data due Thursday

A further rise in price pressures is expected, according to a Bloomberg News survey, with headline inflation expected at + 4.7% vs. + 4.2% (y / y) in May, while inflation underlying should stand at + 3.4% vs. + 3%. Still “largely” anticipated by Federal Reserve policymakers, the acceleration of price pressures may not yet do much to move the FOMC needle in the wake of the May payroll report non-agricultural in the United States.

Having said that, it seems that the cone talk is about to escalate as inflation readings peak. The Fed’s official efforts to shift the focus towards tighter monetary policy could lead to lower US Treasury yields – a worrying future for the greenback, especially if inflation expectations remain elevated.

DailyFX economic calendar, “high” interest rate events, next 48 hours (Table 1)

Market minutes: drops in volatility;  USD Rangebound because US yields are stable;  Inflation data in the United States on Thursday

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

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SEC says it monitors continued volatility in certain stocks https://lost-worlds.com/sec-says-it-monitors-continued-volatility-in-certain-stocks/ https://lost-worlds.com/sec-says-it-monitors-continued-volatility-in-certain-stocks/#respond Mon, 07 Jun 2021 15:22:50 +0000 https://lost-worlds.com/sec-says-it-monitors-continued-volatility-in-certain-stocks/

AMC Empire 25 off Times Square is open as New York theaters reopen for the first time in a year after the coronavirus shutdown on March 5, 2021.

Angela Weiss | AFP | Getty Images

The United States Securities and Exchange Commission said Monday it was closely monitoring wild trading in stocks even recently to ensure market stability.

“SEC staff continue to monitor the market in light of the continued volatility of certain stocks to determine if there have been market disruptions, manipulative transactions or other improper behavior,” said a holder. SEC word to CNBC. “In addition, we will act to protect retail investors if violations of federal securities laws are found.”

The comment came as retail exploded in a handful of speculative names including AMC Entertainment, BlackBerry, Bed Bath & Beyond and, to a lesser extent, GameStop. Retail investors continued to cram into these names as they cheered each other on on social media platforms such as Twitter and Reddit’s WallStreetBets forum.

During AMC’s 83% advance last week, the stock was on several occasions the most active name on the Nasdaq. AMC has climbed over 100% this month alone in intense trading after a 160% lead in May, pushing its 2021 rally to over 2,500%.

TD Ameritrade has taken steps to increase the margin requirements on AMC and GameStop to 100%, which means investors are required to buy all securities in cash.

In January, amid GameStop’s historic tightening, the SEC pledged to protect individual traders and to carefully review actions taken by brokerage firms that could “disadvantage investors or unduly hamper their ability to trade certain securities.” .

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How to brand fintech in the volatile era of Gamestop https://lost-worlds.com/how-to-brand-fintech-in-the-volatile-era-of-gamestop/ https://lost-worlds.com/how-to-brand-fintech-in-the-volatile-era-of-gamestop/#respond Mon, 07 Jun 2021 10:00:25 +0000 https://lost-worlds.com/how-to-brand-fintech-in-the-volatile-era-of-gamestop/

There is a new acronym used in investment circles: BANG. That means Blackberry, AMC, Nokia and Gamestop, four companies that epitomize the phenomenon of memes stocks, or stocks that are gaining traction and investors in large part thanks to the social media hype.

This investment in social media to meet culture and retail has exploded over the past year, thanks to an increase in app popularity fueled by the pandemic making it easier for people to invest. Individual investors opened more than 10 million investment accounts in 2020, and that only intensified at the start of this year.

Amid this volatility, Fintech Startup Public is launching its very first branding campaign and new brand identity that presents the app as a place to balance the current hype of retail investing with the community and long-term stability. “People could come and invest in GameStop, but after using the product, are they building a suitable portfolio? Says co-founder and co-CEO Leif Abraham. “This is our goal. It’s about creating long-term investors, not just people who want to bet on a quick stock. It is about making the stock market a consumer product, but not purely speculative, also on the side of building proper portfolios.

[Image: courtesy Public]

In January, thanks to the hype on forums like Reddit’s WallStreetBets, Gamestop stock jumped 1,600% and AMC stock is up 2,400% this year. The cinema chain made the buzz this week in offer investors free popcorn. Online retail investing, where non-professional people buy and sell securities through brokerage firms, has been popular since the first dotcom boom.remember the monkey E-Trade? —But this new wave has struck amid a convergence of mobile apps and social media virality.

Public has positioned itself as what it calls a “social investing app,” which allows users to track other people’s portfolios while getting information from analysts for companies and industries. Abraham uses a gym metaphor to describe it as the equivalent of an investment in having a personal trainer and gym buddies to help motivate you. It was launched in September 2019 and raised $ 220 million in February, which boosted its valuation to $ 1.2 billion.

[Image: courtesy Public]

The new campaign, created with New York-based agency Worx, features photos of real public users and a snapshot of their portfolios. We see Milana, who invests in Tesla, Google and Zoom; Mick, who invests in Shopify, Twitter and Farfetch; and Riana, which invests in AMD, Google and Square. The models are cool, young, and diverse, and the ads use Helvetica font and lots of white space, giving them a American clothing vibe, without all the sex.

[Image: courtesy Public]

The new logo, designed by Studio Mococo, has two simple blue circles of different sizes. Studio Mococo co-founder and executive creative director Martin Grasser said the goal is to create an identity that embodies the purpose of the product. “At its core, the differentiation of Public lies in its diverse community,” says Grasser. “In the new logo and branding system, the two circles remind us of the friendly chat bubbles we all know and love, while also invoking a metaphor for financial growth. Together they also make a P and nod to the name of the company.

The meme stock hype has been coupled with some bro-y culture, the jokes inside and slang of WallStreetBets, and the Confetti-brimming gamification of investing on Robinhood. Abraham says the purpose of this campaign is to illustrate how Public is different. According to Public, its over 1 million users are 40% women, 45% POC, 90% newbie investors and 90% long-term investors. “You can come from Twitter or Reddit to find out about AMC and Gamestop, and then Public introduces you to a different investment culture,” says Abraham.

[Image: courtesy Public]

This belies another big difference between Public and many other popular retail investing apps, namely that Public doesn’t rely on the somewhat controversial control flow model (PFOF), which essentially prompts apps to push users to invest as much and as often as possible, focusing on quantity rather than quality. In December, Robinhood agreed to pay the SEC a $ 65 million fine to resolve charges that have misled customers about PFOF. Public withdrew PFOF from its activities in February.

Just as Public encourages its users to balance their investments between the trending stocks and a long-term stable portfolio, the company’s branding work straddles the serious and the silly. To mark the abandonment of PFOF, Public asked Michael Bolton to sing it in a series of wacky digital videos.

Abraham co-founder and co-CEO Jannick Malling says they see all of the company’s movement as part of its brand communication, which informs everything from the new logo to its investors. “In the beginning, we took the investment from Will Smith, JJ Watt and Tony Hawk, and when people see them involved it helps build a more mainstream product,” says Malling. “Even recently, we rolled out a feature called Town Hall, which is our version of an AMA, and kind of like a retail version of a results call.”

[Image: courtesy Public]

The audience’s Town Hall in April introduced Lemonade co-founder Shai Wininger and Bumble founder and CEO Whitney Wolfe Herd. Malling says it’s part of the educational component of the business that aims to turn new users into long-term investors. “If you only have one stock with no education, then it’s all speculative,” says Malling. “But if you have action and a meaningful education then this movement that we are seeing can be a massive force for good.”

Abraham says this new generation of investors who have flocked to the market have more complex criteria for the companies they want to invest in, a criterion that is more based on business strategy, corporate culture and the direction of the world. than the most recent quarterly results.

“They’re a lot more long-term, and there’s also an aspect of voting with your dollars, and where they want the world to go,” says Abraham. “It’s a representation of their identity. And this is also something that we want to convey with our brand.

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Bond Traders: Taper-talk Roadmap Revives Bond Market Volatility https://lost-worlds.com/bond-traders-taper-talk-roadmap-revives-bond-market-volatility/ https://lost-worlds.com/bond-traders-taper-talk-roadmap-revives-bond-market-volatility/#respond Sun, 06 Jun 2021 04:17:00 +0000 https://lost-worlds.com/bond-traders-taper-talk-roadmap-revives-bond-market-volatility/ Bond investors are convinced that the calm that has prevailed in the Treasury market for months will have a finite life.

A report on job growth in May that disappointed some traders sparked an explosion of short covers on Friday. But that has left untouched speculation that the U.S. recovery from the pandemic is strong enough to cause the Federal Reserve to finally start talks this month around the idea of ​​scaling back its massive bond-buying program.

No political decision is expected at the Fed’s June 15-16 meeting. The options market is merging around real change – with the potential to explode returns on their volatility-killing range trade – in August. This is when the Fed traditionally holds its annual meeting in Jackson Hole, Wyoming, which has served as a venue in the past for important political signals.

“The Fed will at least admit that it has gone from abstinence to talking about it,” said Gene Tannuzzo, portfolio manager at Columbia Threadneedle.

“Our timeline for an announcement would center on Jackson Hole as a forum to initiate an academic discussion on the topic,” and September as the baseline scenario to unveil a plan to reduce bond purchases, setting the yield at 10 years for a likely rise to 2% by the end of the year, he said.

Bloomberg

Forerunner of hiking

Tapering is important for financial markets because the Fed has signaled that it will be a precursor to real rate hikes. While policymakers expect they will keep overnight rates close to zero until at least 2023, bond traders have been betting for months that the take-off will come early in the year.

With investors holding firm on these expectations for now, volatility has collapsed. A measure of future fluctuations in treasury bill prices is at its lowest since February. And 10-year yields moved sideways, pivoting around 1.6% for weeks, after hitting an over-year high of 1.77% in March.

Preparing for the Fed’s June 16 decision is not without risk. Next week, a report is expected to show that consumer prices accelerated in May at the fastest pace since 2008. This was after the above-forecast reading in April pushed yields towards the higher end of their recent range. There is also a series of $ 120 billion note and bond auctions to be absorbed next week.

Jeffrey Rosenberg, senior portfolio manager at BlackRock Inc., also saw in May’s jobs report – which included strong wage growth – leaving the Fed on track to send a signal in June of a slow movement towards a reduction in asset purchases.

In search of progress

The Fed currently buys about $ 120 billion in debt each month – $ 80 billion in treasury bills and $ 40 billion in mortgage-backed securities. The central bank has said it will continue to do so until it has made “further substantial progress” towards its employment and price targets.

Further on, bets on a Jackson Hole reshuffle have surfaced in the options market, targeting a more aggressive rate outlook for the Fed.

“Until the Fed talks about phasing out, or if we get the wrong inflation number, current yield levels will remain unchanged for now,” said Gary Pollack, head of fixed income for management. of private assets at Deutsche Bank. “But I expect yields to be higher by the end of the year, with 10-year yields rising to 2%. The outlook is still bright for the US economy.

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A story of two jobs reports and how they took gold investors in a volatile race https://lost-worlds.com/a-story-of-two-jobs-reports-and-how-they-took-gold-investors-in-a-volatile-race/ https://lost-worlds.com/a-story-of-two-jobs-reports-and-how-they-took-gold-investors-in-a-volatile-race/#respond Fri, 04 Jun 2021 22:53:00 +0000 https://lost-worlds.com/a-story-of-two-jobs-reports-and-how-they-took-gold-investors-in-a-volatile-race/

The underlying feature of the price of gold over the past 48 hours is akin to a wild carnival race. It started yesterday when ADP released its national jobs report, which found private payrolls increased by 978,000 jobs last month. The report came well above economists polled by Reuters and the Wall Street Journal. Economists polled by Reuters had predicted that the private wage bill would increase by 650,000 jobs.

The ADP report is a joint venture with Moody’s Analytics and is always released ahead of the Department of Labor’s non-farm payroll report which comes out the next day. Yesterday’s report indicated that private employers in the United States have increased the pace of hiring new employees due to pent-up demand which is a direct result of a rapid reopening of the economy in the United States. While he said there were still shortages of workers and raw materials that held back the recovery in the labor market, the number of new hires as reported by ADP is well above estimates.

As we discussed yesterday and reported by Reuters, “The ADP report overestimated private payroll gains in the April Jobs Report, after underestimating growth during much of the recovery in the economy. ‘job, which began in May 2020, leaving economists cautious about reading too much in the report. “

MarketWatch also cautioned its readers about the limitations in obtaining usable information from the ADP report, stating, “The ADP survey is historically a bad month-to-month indicator for the official report on the market. government job, but they are both moving in the same direction this year. . Economists forecast an overall increase of 671,000 new jobs in May in Labor Department data due Friday. The count, which will be published Friday at 8:30 am. East, also includes government employees. “

Although many analysts, including myself, have pointed out that the ADP report on private sector employment is not necessarily a strong enough precursor to predict the Department of Labor’s employment report or l state of the American workforce. This did not stop many traders and investors from making profits or liquidating their positions en masse ahead of today’s report.

In fact, this report was the main reason why gold sold so spectacularly. Considering gold futures hit an intraday price of $ 1,920 on Tuesday of this week after a three-day holiday weekend, the US drama describes it well.

In today’s trading, gold futures traded lower ($ 1855) than yesterday’s low. However, once the numbers were released and in fact much lower than economists’ forecasts, a consensus emerged that there would be 671,000 jobs added last month based on a survey of Dow economists. Jones and the Wall Street Journal. bullish to bearish.

According to Brien Lundin, editor of Gold Newsletter, “With the consensus expecting an explosion in the number of jobs on the rise, gold was forecast for a fall, as it had proved sensitive to good economic news. or anything that would encourage the Fed to tighten its ultra-accommodative monetary policies. Instead, we got a disappointing number compared to expectations, and the metal rebounded in response. “

This put gold back into rally mode with the net result of a gain of $ 20.80 (+ 1.11%) on gold futures, compared to the Comex contract of August 2021, carrying the precious yellow metal at $ 1894.10 as markets close in New York on Friday.

I think what the last 24 hours have taught us is that gold traders and investors are so hungry for information regarding the Federal Reserve’s upcoming monetary policy that they are so focused on any fundamental event. which could alter the perception and sentiment of the market.

Information on when the Federal Reserve will refine its quantitative easing program and raise interest rates was presented transparently by the Federal Reserve in the minutes and press conference released by President Powell after each FOMC meeting. However, because their mandate depends on data, we know that at some point the Federal Reserve will start to lower and raise its federal funds rate. Simply put, the Fed’s monetary policy is a moving target and likely to be significantly restructured as the economy rebounds.

However, the incredible volatility from sharply bearish to sharply bullish over a 24 hour period is proof that traders and investors are prepared at all times to overreact, sometimes too quickly to economic reports as they arise. their publication. For those who want more information, please use this link.

Wishing you, as always, good exchanges and good health,

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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Inflation, Treasury volatility and risky growth stocks https://lost-worlds.com/inflation-treasury-volatility-and-risky-growth-stocks/ https://lost-worlds.com/inflation-treasury-volatility-and-risky-growth-stocks/#respond Fri, 04 Jun 2021 20:36:39 +0000 https://lost-worlds.com/inflation-treasury-volatility-and-risky-growth-stocks/

With inflation reaching more than 4% recently from 2.6% about a year ago, concerns about longer-term inflation have become in the spotlight. The Fed’s easy money policies and government stimulus spending have pushed growth and momentum into an epic bull run over the past year. However, these equity factors are now facing substantial risks linked to the volatility of the bond markets.

Often underestimated, implied cash volatility (TVOL) is a measure of the uncertainty reflected in the prices of options on 10-year yields. This implied volatility traps all kinds of valuable economic information such as inflation expectations, unemployment and the stance of monetary policy.

Increases in TVOL are negatively related to aggregate market returns, as uncertainty in rates makes stocks riskier due to the discounted component of future cash flows. The graph below shows the relationship between aggregate market returns and the change in TVOL over 10 years. All TVOL metrics are taken from the over the money (ATM) futures options located on the OptionMetrics volatility surface.

It is obvious that a rise in TVOL creates real headwinds for the entire equity market. However, rate uncertainty should not be expected to affect all securities equally. Financial theory tells us that sectors should have different exposure to changes in interest rates, namely growth and value. Growth stocks are expected to generate greater cash flow going forward. As a result, rising rates should compress their valuations.

90-day rolling correlations are plotted for low Book-to-Market (B / M), or growth, and high B / M, or value, returns and TVOL changes in the following chart.

Historically, the sensitivities of growth and value to rate uncertainty have been fairly close to each other. However, growth and value exposures start to diverge considerably from 2021. While the high B / M portfolio has a close to zero correlation with TVOL at the end of January, low B / M stocks exhibit strong negative sensitivity. close to -0.5. Therefore, increases in TVOL impose much larger losses on growth relative to value.

FAANG stocks (or the most important US tech stocks: Facebook, Amazon, Apple, Netflix and Google) are now increasingly sensitive to inflation news, with rising rates compressing their valuations. This should fuel volatility until mid-June when important economic data is released.

Critical dates for this industry are the non-farm payroll news on June 4 and the core CPI numbers on June 10. These dates are known ex ante periods of increased risk to technology with higher than expected employment or CPI, which can cause continued inflation anxiety for investors.

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