I:RUT Jun 2020 1900.000 call

OPR - OPR Delayed Price. Currency in USD
0.2600
0.0000 (0.00%)
At close: 2:24PM EDT
Stock chart is not supported by your current browser
Previous Close0.2600
Open0.2600
Bid0.0000
Ask0.5000
Strike1,900.00
Expire Date2020-06-19
Day's Range0.7000 - 1.0500
Contract RangeN/A
Volume48
Open Interest184
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    Russell 2000 Soars 50% in Less Than 3 Months: 5 Top Picks

    Besides these three large-cap centric indexes, the small-cap specific Russell 2000 Index has been performing strongly in the past three months.

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  • A Rally Running on Moral Hazard Looks Like the Fed’s Latest Feat
    Bloomberg

    A Rally Running on Moral Hazard Looks Like the Fed’s Latest Feat

    (Bloomberg) -- “Recovery trade” has become too flaccid a term for what’s going on in the stock market, courtesy of the Federal Reserve.The S&P 500 has surged almost 40% since March 23, its fastest advance since 1933. The Nasdaq 100 briefly erased all its losses on Wednesday. Corporate borrowers are issuing debt at a record clip as short bets against high-yield bonds evaporate. And with Treasury yields pinned down by interest rates close to zero, valuation models that plot corporate earnings against bond payouts show stocks -- somehow --remain historically cheap.It’s nothing new -- it’s just lasting longer than anyone expected. With equities powering past millions of lost jobs, images of protesters facing off with police over racism and daily reminders of the coronavirus’s economic toll, some market-watchers are seeing shades of moral hazard. By injecting massive liquidity through Treasury purchases and backstopping corporate bond markets, they say, the central bank is bailing out businesses that may have struggled and fomenting wealth inequality. At the investor level, it’s cover to pile in to riskier assets with little chance of losses.“The Fed indicating that they’re going to keep interest rates low for a very long period of time, that they’re going to be supportive of the corporate bond market -- in essence what you’re doing is you start to incentivize risk taking,” said Brian Levitt, global market strategist at Invesco. “There’s a lot of money on the sidelines collecting zero for a long period of time, investors start to think about how to allocate that money.”In Chairman Jerome Powell’s own words, policy makers acted “forcefully, proactively and aggressively” to combat the effects of the virus on the U.S. economy. The raft of support measures that followed included nine special lending facilities aimed at money markets, municipalities and the credit markets, among others.The impact was immediate: the S&P 500 bottomed on March 23, the same day that the Fed announced it would take the unprecedented step of buying corporate debt and exchange-traded funds tracking those securities. A record $27 billion flowed into fixed-income ETFs in May after the Fed kick-started its bond-buying program on May 12.Lifelines are visible in stock market’s most battered corners. Economic reopening optimism has boosted the small-cap Russell 2000 by nearly 16% over the past month, outpacing the broader S&P 500’s 10% gain. Retail brands such as Gap Inc. and L Brands Inc. have both surged by nearly 53% over that time, while easing global lockdown measures have buoyed shares of Royal Caribbean Cruises Ltd. by 42%.S&P 500 futures contracts slipped Thursday after the underlying gauge rallied 3.1% in the prior four days.The Fed’s actions have drawn criticism from high-profile naysayers such as Scott Minerd, chief investment officer at Guggenheim Investments, who said Wednesday that the central bank sent the world a “buy signal” through its programs propping up the corporate bond market. That concern has been echoed by Fed veterans such as William Dudley.“People who have high-yield debt outstanding, a lot of times that happens by choice,” said Dudley, former New York Fed president, in a Bloomberg Television interview. “For the Federal Reserve to intervene and support those asset prices, is basically creating a little bit of a moral hazard in the sense that you’re encouraging people to take on more debt.”In addition to the lending facilities, the Fed also slashed rates to near zero and pledged unlimited quantitative easing, ballooning its balance sheet to $7 trillion. That’s confined benchmark 10-year Treasury yields to an 18-basis point range over the past month near historically low levels. By some measures, that makes stocks more attractive: one fashionable indicator, the price-liquidity ratio -- which compares S&P 500 market cap versus total money supply -- suggests that equities actually look cheap, even as earnings collapse.“The potential is there for another bubble in financial assets. I view the Fed as another data point in the supply demand equation and the old adage of “don’t fight the Fed” comes to mind,” said Dan Russo, chief market strategist at Chaikin Analytics. “Does that have the potential to inflate bubbles? Yes.”Of course, it’s hard to argue that the Fed had other options when faced with a pandemic of unprecedented proportions and an all-but-guaranteed recession. Even with the raft of emergency measures, the extent of the economic damage has been catastrophic. The U.S. unemployment rate is expected to surge to 19.5% in May, after spiking to 14.7% the prior month. Average hourly earnings are forecast to rise by 8.5% on a yearly basis, suggesting that the hardest hit have been low-income earners.Powell himself has acknowledged the extreme length the central bank has gone to in order to cushion the economy. He insisted that the Fed’s policies “absolutely” don’t add to inequality and said the central bank’s real aim is to preserve jobs by keeping companies afloat.“Think about where we were in early April with inflation expectations close to one and falling and 6 million people joining the ranks of the unemployed,” Invesco’s Levitt said. “If the Fed doesn’t respond to that or even tightens in that environment like they did during the Great Depression, you exacerbate the situation and make it far worse.”Still, the ensuing equity rally born from those policies has bedeviled bears and is even starting to confuse the bulls. For Albert Edwards at Societe Generale, who is sticking to his bearish call on mega-cap technology stocks, it’s been an exercise in frustration.“We are now only 10% from February’s all-time high, and with the U.S. unemployment rate heading toward 20%, one might ask: At what point does the stark disconnect between Wall Street and Main Street become a political embarrassment for the Fed?” Edwards wrote in a note last week. “Maybe never.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Chase Koch joins 'Influencers with Andy Serwer'
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    Market Recap: Tuesday, June 2

    Stocks closed at session highs on Tuesday, with the Dow ending 267 points higher, as reopening hopes offset continuing protests across the U.S. The energy sector outperformed the broader market as crude oil prices settled at a three-month high.

  • Why I Am Turning Cautious About Yesterday’s Stock Upswing
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  • SocGen Quants Skeptical on Stocks Amid ‘Wobbly’ Cyclicals Rally
    Bloomberg

    SocGen Quants Skeptical on Stocks Amid ‘Wobbly’ Cyclicals Rally

    (Bloomberg) -- U.S. stocks may be well off their mid-March lows, but Societe Generale SA’s quantitative strategists are wary of the rally.“From a market technical perspective, the cyclical recovery has been very volatile, wobbly, up one week, down the next, indicating the fragility of the market recovery,” Solomon Tadesse, head of North American equity quant research, said in an email May 31. “If this is a true economic recovery and if the March market plunge is the market bottom, we should see a clear and strong rebound in cyclicals.”Cyclical stocks, those that benefit most when the economy is running hot, have shown some signs of resurgence. On Tuesday and Wednesday last week, the Russell 2000 Index outperformed the tech-heavy Nasdaq-100 Index by more than 2.5 percentage points only to lag behind by about 2 percentage points in each of the following two sessions. The Russell 1000 Value Index behaved similarly relative to its Growth counterpart.“The worst may not be over for the market,” Tadesse and colleagues including Andrew Lapthorne wrote in a separate note May 28 that studied the past 100 years of market downturns and recoveries. While optimism about economic recovery might be spurring gains in cyclicals, the uncertainty about how the pandemic will end, and the timeline of potential vaccines, will limit their advance, they said.SocGen’s warning comes as Goldman Sachs Group Inc. on May 29 pared its forecast for further declines, citing the strength of stock gains and support from fiscal stimulus and monetary policy. Strategists led by David Kostin moved their downside S&P 500 forecast to 2,750, from a previous 2,400, compared with the May 29 close of 3,044.Still, Goldman sees a number of reasons to be cautious on U.S. stocks, including lack of buybacks and narrow participation in the recent gains. Even JPMorgan Chase & Co., which made an early call that the worst was behind markets, tamped down its optimism on equities last week.The situation further out in the future is promising, Tadesse said.“In the medium term, as all clears up and economic recovery holds, I expect a significant cyclical rally, given also the depressed valuations,” he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • The Really Big Stock Bull Case Says Fed Stimulus Doesn’t Go Away
    Bloomberg

    The Really Big Stock Bull Case Says Fed Stimulus Doesn’t Go Away

    (Bloomberg) -- How willing will the Federal Reserve be just to switch off all the stimulus it rolled out to safeguard markets from the coronavirus? The most plausible answer is “not very,” logic that forms the most aggressive bull case on equities.As anyone who has watched the rocky path to reopening cities and states, it’s hard to know when to sound the all clear in waters as uncharted as they are now. Uncertainty dictates prudence. That’s the case in deciding when to allow people back to work, and will logically guide policy makers, too, when it comes to their measures that have kept markets in working order.With the S&P 500 already two-thirds of the way back from its bottom, that prospect -- that virus-fighting stimulus could linger for months or years after the worst of the pandemic has passed -- explains the uncanny confidence of stock bulls in the face of the worst economy since the Depression. As they see it, if even a modicum of economic order is restored and stimulus sticks, it’s a recipe for a melt-up.“The markets have become addicted to stimulus. That is the key factor that is going to continue to drive risk appetite, just like it did in the last cycle,” said David Spika, president of GuideStone Capital Management, which has about $12.5 billion in assets under management. “Going back to the last cycle, the Fed stayed involved for several years even though we returned to previous employment levels and we returned to previous earnings levels -- and the Fed continued to buy bonds.”Make no mistake: as big a role as reopening has played in the rebound, Federal Reserve largess, alongside trillions of dollars in payouts from Washington, has been as a crucial element lifting stocks. While the path of the virus is unknown -- Will there be a second wave? Can a vaccine succeed? -- one thing that seems certain is perpetual Fed support.Policy makers are “not going to be in any hurry to withdraw these measures,” said Chairman Jerome Powell late last month.That’s comforted equity investors, tamping down concerns over a credit crunch or solvency risk. Case in point: A Goldman Sachs basket of stocks with weaker balance sheets rose 4.3% this week, nearly double a similar group of stocks with healthier finances. Tuesday marked the widest gap in favor of the former since May 2009, when stocks were in the early days of their record bull run.The embrace is also palpable across the universe of smaller companies, where over a third of firms are expected to lose money and per-share profits are forecast to plummet 95% in the three months ending in June, according to Credit Suisse. The Russell 2000 rose 6.4% in May, its best month versus the S&P 500 in over a year.Crediting the Fed with boosting risk-assets is nothing new but its open-endedness may be the only way to explain a world in which 20 million Americans have lost their jobs and the S&P 500 is about four big days away from making up all the ground it lost since February. And it’s not just a full comeback that is envisioned. Many Wall Street strategists see the potential for the S&P 500 to go even higher than it was before the outbreak began.Take Fundstrat Global Advisors’ Tom Lee, for example, who sees the S&P 500 ending the year at 3,450 even as company profits plunge. Or Sophie Huynh at Societe General, who predicts the S&P 500 will rise to 3,500 by the end of 2020. It closed Friday at 3,044.The U.S. central bank has taken unprecedented steps to combat the economic crisis. It cut interest rates to near-zero and pledged to keep policy easy. It resumed asset purchases, declaring Quantitative Easing (QE) unlimited. The Fed is also buying a wide range of securities, including corporate and municipal debt.As a result, the central bank’s balance sheet has ballooned to $7 trillion, with roughly $3 trillion added in just three months -- roughly triple what was added in the year following the financial crisis in 2008. That increase is showing up in broad measures of money supply, including a gauge called money of zero maturity and Federal Reserve M2 money supply.Such a surge in liquidity is reassuring the bulls. Michael Darda, chief economist and market strategist at MKM Partners LLC, says it shows there’s more upside potential for stocks than downside risk. A measure called the price-liquidity ratio that plots the market cap of the S&P 500 versus total money supply shows equities actually look cheap, even as earnings collapse. Add to that rock-bottom interest rates on bonds, and a stock bull case is born.And if such stimulative policies remain alongside an economic recovery, its possible inflation will materialize. Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, points to the years after the financial crisis, when a liquidity explosion led to surges in asset prices -- from stocks to bonds, real estate and gold.“If past is prologue, the lesson is that we need to admit that this amount of liquidity means that asset inflation will likely be unleashed on the economy in coming years,” he wrote to clients. “That’s something we need to consider even in a slow-growth environment.”Granted, all bets are off if economies must shut again, unemployment levels stay high and a wave of defaults emerges. Chair Powell has made calls for more fiscal stimulus loud and clear, and the latest beige book from the central bank -- a report based on anecdotal information collected by the regional divisions -- detailed the devastation that’s still apparent across the U.S. economy.All the more reason, though, for Fed stimulus to remain if the economy is in need. This past week alone, Chevron Corp. and Boeing Co. announced permanent layoffs. Reports surfaced that SoftBank Group Corp. is planning deep staff cuts too.“The general expectation is that the Fed is going to maintain its supportive posture,” said John Carey, portfolio manager at Pioneer Investment Management. “That’s definitely one of the factors giving people confidence in purchasing shares -- they see very strong support from the Federal Reserve.”To be sure, such extended policy measures could lead to ills down the road including the potential for run-away inflation, according to Sandip Bhagat, Whittier Trust’s chief investment officer. Still, it’s likely it puts a floor under the stock market for now.“Don’t naturally assume it to be singularly stimulative with no side effects,” Bhagat said by phone. “But all the stimulus will prevent the market from melting down again, I just don’t know if it will sent it off to the races where S&P 500 3,000 becomes S&P 500 5,000.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • McVey Says KKR Will Be Aggressive in Infrastructure Investing
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  • 5 Sector ETFs at the Forefront of the Small-Cap Rally
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    5 Sector ETFs at the Forefront of the Small-Cap Rally

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  • Market Recap: Thursday, May 28
    Yahoo Finance Video

    Market Recap: Thursday, May 28

    Stocks ended near session lows amid new developments that could raise tensions between the U.S. and China, and a deluge of new economic data, much of which was still consistent with a contraction but at least signaled some stabilization after an initial slump in activity.

  • Wall Street Shows Risk Appetite With Small-Cap Profits Near Zero
    Bloomberg

    Wall Street Shows Risk Appetite With Small-Cap Profits Near Zero

    (Bloomberg) -- For one of the starker examples of how much recovery-obsessed investors are willing to stomach lately, compare this week’s surge in small caps with first-quarter results the companies just finished reporting.Weighted to service-oriented companies particularly hard hit by stay-at-home orders, the Russell 2000 saw per-share profits fall 90% from a year ago, several times more than members of the S&P 500, according to Goldman Sachs data. Meantime, before a hiccup on Thursday, the Russell 2000 Index had risen on eight of nine days in a rally exceeding 16%.“With small company stocks, because they carry significant debt and are more fragile businesses as a group, they face a more existential threat. That’s the same reason they tend to lead the way out of most recessions,” said Peter Mallouk, president and chief executive officer of Creative Planning. It’s not just that their earnings outlook improves, but the “existential risk of complete failure gets taken off the table,” he said.The divergence shows what a powerful force hope has been in guiding investors lately. It’s also a laboratory for observing the impact of Federal Reserve actions in equities. Strength in small caps is by definition strength in companies with the weakest credit profiles, and their fortunes turned almost simultaneously with Jerome Powell’s campaign to shore up bond and lending markets.Investors have shown themselves willing to pivot away from lockdown winners including tech and health care and move into shakier corners of the market. But the damage to earnings for smaller companies in the quarter just passed was deep and those stocks are still playing catch-up. Down about 16% this year, the Russell 2000 has lagged behind the S&P 500 by about 10 percentage points. That’s the most on record this far into the year.Earlier: Investors Pile Into Stocks That Win in a Full Economic RecoveryGoldman’s data is based on the total of how much each Russell 2000 company made in the first quarter and compared it with results from a year ago, showing EPS of $32.53 last year versus $3.23 this year.Rather than looking at per-share results, Vincent Deluard, global macro strategist at INTL FCStone, plotted the total amount of money made by each company that has released results. Based on a 90% reporting rate, the index’s components posted a loss of about $37 billion in the first quarter, his model showed.The group was already on weak footing coming into the crisis. More than a third of U.S. small caps had losses before the outbreak, while 40% don’t have sufficient cash to cover two months of operating expenses, according to a recent report from Deluard.“In such desperate times, only balance sheet strength, and especially cash positions, matter,” he said.Looking ahead, about 47% of Russell 2000 companies are projected to report a loss in the second quarter. That compares with 16% for large ones, according to data compiled by Bloomberg. And at 1 times sales, the Russell 2000 is trading near a multiple that’s one quarter of what investors are willing to pay for stocks in the Nasdaq 100. That’s the biggest discount since the dot-com era, data compiled by Bloomberg show.Some researchers, however, see potential for small-cap outperformance once a recovery begins, signs of which were prevalent this week. Coming out of recessions, small caps have beaten large nine out of the last 10 times and also tend to beat coming out of bear markets, according to Jefferies’s Steven DeSanctis and Eric Lockenvitz.“You’ve seen both value and small-caps do better because of the anticipation of a better economic cycle in the upcoming year,” said Wayne Wicker, chief investment officer of Vantagepoint Investment Advisers. “With that hope by investors, I think you’ve seen a shift to those more pro-cyclical plays.”To Barry James, portfolio manager at James Investment Research, the trend also makes sense. Investors already took advantage of the run-up in tech firms -- now, they’re looking for new deals.“We view the market as a battlefield and the generals have been leading and now maybe the privates are coming into battle,” he said. “Folks realize that is where the opportunities are.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Niall Ferguson joins 'Influencers with Andy Serwer'
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    Market Recap: Tuesday, May 26

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    Why Small-Cap ETFs & Stocks Outperformed Last Week

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  • 5 Small-Cap Stocks That Surged in May and Still Have Momentum
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    5 Small-Cap Stocks That Surged in May and Still Have Momentum

    Besides these three large-cap centric indexes, the small-cap specific Russell 2000 Index is performing strongly in May.

  • Market Recap: Friday, May 22
    Yahoo Finance Video

    Market Recap: Friday, May 22

    Stocks ended little changed Friday, as ongoing signs of the economic damage from the coronavirus pandemic compounded with fears of rising U.S.-China tensions. Still, the three major U.S. equity indices posted weekly advances of about 3%, with investors largely factoring in the fallout from the COVID-19 crisis into asset prices.

  • Market Recap: Thursday, May 21
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    Market Recap: Thursday, May 21

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  • Investors have to 'pick and choose the areas benefitting from the recovery': Expert
    Yahoo Finance Video

    Investors have to 'pick and choose the areas benefitting from the recovery': Expert

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  • U.S.-China Tension Has Potential to Cause Market Correction: BlueBay
    Bloomberg

    U.S.-China Tension Has Potential to Cause Market Correction: BlueBay

    May.21 -- Investors see the coronavirus pandemic as a natural disaster, causing a severe shock that is relatively short lived, followed by a strong recovery, according to David Riley, chief investment strategist at BlueBay Asset Management. "But one thing which upsets that narrative would be a re-escalation of trade tensions between the world's two largest economies," Riley said in an interview on "Bloomberg Markets: European Open."

  • US ‘Re-Opening Stocks’ Attracting Buyers; Amazon, Facebook Hit Record Highs
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    Yesterday’s decline into the closing bell didn’t materially change the bullish perspective in stocks or upturn the credit markets.