October 8 Equities Commentary: Scott Bauer

– Scott Bauer: This is Scott Bauer on the floor of the CME Group. Once again, we’re seeing trade tensions move this market. Market really trading on headline risk. Yesterday, we saw the reversal and the market move higher, as comments came out that maybe there was some good progress being made. Then, overnight and early this morning, we saw the opposite of that, market moving lower, as the administration seems to be moving ahead with efforts to limit capital flows to China. And the response from China, we don’t know what that’s going to be yet. They said there will be a response. Earlier today, all 11 sectors trading lower as there is definitely some pressured and heightened volatility in the marketplace. Now, on its lows today, the indices were above last week’s lows by about 40 points in the S&Ps, which is a good thing if that’s where the market stays there. We’d like to see higher lows maybe setting in some sort of bottom. Earnings begin next week in earnest. Analysts do expect the worst earnings that we’ve seen, the worst growth that we’ve seen since 2016. If we start to get some decent reports and OK guidance, that may be a lift for the marketplace. E-Mini option data yesterday, about 420,000 options traded, again, about 69% on the put side. Volume leaders yesterday were all on the put side. End of week 2 October 2800 puts, about 5,000 of those traded. End of week 2 October 2500 puts, about 4,600 of those traded. End of week 2 October 2830 puts, about 4,200 of those traded. And end of week 2, again, October 2825 puts, about 4,000. Now, like I just said, volatility is elevated again. So the E-Mini options are pricing in a move between now and end of day Friday of about $46. Yes, that’s pretty high. But we have Powell speaking, and, of course, we do have the US and China talks set to begin. Bitcoin has been a little bit muted. It’s really traded sideways for about a week or so now on very, very light volume. And that could be trading, on this low volume, could be on the sidelines until we get some of the US China talks, until we see what happens there, because over the last couple of months, Bitcoin really has traded almost as a risk against type of trade, much like gold. Let’s see what happens there. I do have to bring up Micro E-Mini data. Quarter three stats, which just came out, released by the CME, unbelievable. They support how this has been the most successful launch ever at the CME. Average daily trading volume of almost 625,000 contracts, and that was in quarter 3. And over 59 million contracts Micro E-Minis have traded since its launch back in May. This is Scott Bauer on the floor of the CME Group.

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