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Exchanges - State Of The Markets June 2020

Jun. 08, 2020 7:00 AM ETCME, CBOE, TW, MKTX, NDAQ2 Comments
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  • Volatility has dropped from Q1 2020 but trading volumes stay elevated in many asset classes.
  • Tradeweb & MarketAxess trounce the exchange field and the broader market.
  • CME is the cheapest of the group I'm willing to own; I continue to avoid CBOE.
  • Charts galore!

state of the markets exchanges

(Source: Chart Your Trade)

The State of the Market series is a periodic check-in on global market activity and its resulting impact on exchange earnings and stock performance. Trading volumes are a significant driver of exchange stocks, so it's important to follow relevant metrics closely to understand where these stocks are heading.

With the Q2 2020 already more than two-thirds over, the prevailing narrative in the exchange world today focuses on the challenge of tepid trading volumes & activity in the months following a blowout Q1. With coronavirus-related volatility causing an explosion of volumes in March and early April across virtually all asset classes, investors are following how exchanges have adapted to the new trading landscape and what markets have been most affected. I'll run through the major asset classes at a high level below, then wrap up with individual impacts to the exchanges & the outlook for their stocks.


energy dashboard oil nat gas charts (Source: Macrotrends, Yahoo Finance, EIA)

Q1 2020 was one for the ages in the energy sector. A demand shock coupled with an OPEC-induced supply shock sent crude oil prices plummeting in March, sparking the now infamous negative $40 print on front month futures at one point as storage reached capacity and tankers were left waiting on the open seas to unload oil.

Q2 so far has been a story of recovery, both in prices and volatility. With both the Chinese and broader global economies slowly re-opening, we're beginning to see a recovery in air travel, auto activity and industrial production, all of which have a positive impact on oil demand:

daily activity index world bloomberg

(Source: Bloomberg)

While markets have calmed down since March, there remains a great deal of uncertainty and potential for additional volatility as we move through the year. Just the other day, Bloomberg came out with a piece arguing the same factors

This article was written by

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I write a weekly newsletter on exchanges.  You can subscribe here:www.joinfrontmonth.comFollow for in-depth analysis of the exchange & market data industry. Coverage includes: MKTX  TW  CBOE  CME  NDAQ  SPGI   MSCI  FDSProfile pic is of George Post, architect of the NYSE building

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article should not be taken as investment or financial advice and is for informational purposes only. Consult a financial advisor before making investment decisions. This article discusses public information sourced from SEC filings, online news articles, and investor relations sites, which have been sourced appropriately. Future performance could differ from what is estimated in the article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

How can you talk exchanges w/o mentioning ice?????
Author is "... willing to stay positive on the stock [CME] long term ... ."

So am I (though I'm slightly underwater at this point).

Retired dividend-growth investor
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Related Stocks

SymbolLast Price% Chg
CME Group Inc.
Cboe Global Markets, Inc.
Tradeweb Markets Inc.
MarketAxess Holdings Inc.
Nasdaq, Inc.

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