Klaus Vedfelt Introduction I spend a lot of time on X (formerly known as Twitter) - probably more than I should. Lately, two things have started to stand out to me: We often discuss consumer weakness. Companies like Dollar General (DG) are seeing tremendous pressure on the lower-income consumer. Even McDonald's (MCD), which is usually protected against consumer weakness, had to come up with measures to grow its sales. While the lower and middle class are struggling, investors with stock market exposure seem ...

Core Insights - CME Group reported its second-highest monthly volume ever in August 2024, with an average daily volume (ADV) of 31.7 million contracts, reflecting a 31% increase compared to the previous year, driven by significant growth across all asset classes [1][2]. Interest Rate Products - The interest rate ADV reached a record 18.3 million contracts, with the U.S. Treasury complex achieving an all-time monthly record ADV of 11.5 million contracts, including record volumes for 2-year, 5-year, and 30-year futures contracts [2][4]. - SOFR futures and options volume increased by 48% to 6.3 million contracts, and BrokerTec cash U.S. Treasury notional volume hit a year-to-date record of $249 billion on August 5 [2][5]. Equity Index Products - Record August ADV for equity index products was 7.5 million contracts, with notable increases in various options and futures, including a 15% increase in overall equity index ADV [3][4]. - Micro E-mini Nasdaq-100 futures ADV increased by 36% to 1.6 million contracts, and E-mini S&P 500 options ADV rose by 9% to 1.5 million contracts [4]. Agricultural Products - Agricultural ADV reached a record of 1.6 million contracts, with specific increases such as corn futures ADV rising by 36% to 435,000 contracts and soybean oil futures ADV increasing by 31% to 163,000 contracts [3][4]. Foreign Exchange Products - Foreign exchange ADV increased by 36%, with significant growth in specific currencies, including Japanese Yen futures ADV rising by 47% to 199,000 contracts and Canadian Dollar futures ADV increasing by 41% to 98,000 contracts [4][5]. Metals Products - Metals ADV saw a substantial increase of 43%, with metals options ADV rising by 119% to 125,000 contracts and gold options ADV increasing by 127% to 96,000 contracts [4][5]. International Activity - Record international ADV of 8.9 million contracts was reported, with EMEA ADV at 6.5 million contracts, Asia ADV up by 37%, and Latin America ADV up by 18% [5]. Micro Products - Micro products also showed strong performance, with Micro E-mini Equity Index futures and options ADV of 3 million contracts representing 41% of overall equity index ADV, and Micro Bitcoin futures ADV increasing by 585% to 48,000 contracts [5]. Additional Highlights - A record single-day volume of $13.5 billion for FX Link was achieved on August 5, and U.S. Repo average daily notional value increased by 1% to $295 billion [5].

Group 1 - BofA Securities analyst Craig Siegenthaler downgraded CME Group Inc from Neutral to Underperform, lowering the price target from $212 to $177 due to increased competition from BGC Group, Cboe Global Markets, and Intercontinental Exchange [1] - CME is expected to reduce pricing on interest rate futures by over 10% as a defensive strategy in response to the upcoming launch of BGC's FMX Futures Exchange [2] - CBOE's index options volume is projected to grow at a 15% CAGR through 2026, indicating a potential shift where options may increasingly replace CME's equity futures [2] Group 2 - The VIX surged 34% to an average of 19 in August, up from 14 the previous month, driven by weak U.S. employment data, leading to CME's strongest trading volumes since the COVID-19 pandemic [3] - CME's trading volumes in August rose 28% month-over-month, particularly in financial futures, contributing to its stock outperforming all sectors in coverage and the S&P 500 [4] - Despite the current high volatility, a downward normalization is anticipated throughout 2025, suggesting the second half of 2024 may be an appropriate time for the Underperform rating [4]

Core Insights - CME Group has set a new record for open interest in SOFR futures, reaching 12,701,232 contracts on August 28, 2024, with an average daily volume of 3.5 million contracts year-to-date [1][2] Group 1: SOFR Futures Performance - The average daily volume for CME Group SOFR options is 1.6 million contracts year-to-date, with open interest exceeding 42 million contracts [2] - SOFR futures, launched in May 2018, have seen broad participation from various market participants including global banks, hedge funds, and asset managers [3] Group 2: Market Position and Offerings - CME Group is recognized as the world's leading derivatives marketplace, providing tools for managing interest rate risk with high efficiency and liquidity [2] - The company offers a wide range of global benchmark products across major asset classes, including interest rates, equity indexes, foreign exchange, energy, agricultural products, and metals [4]

Investors in CME Group Inc. (CME) need to pay close attention to the stock based on moves in the options market lately. That is because the Sep. 20, 2024 $180 Call had some of the highest implied volatility of all equity options today. What is Implied Volatility? Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also m ...

CME Group logo displayed on a phone screen and a laptop keyboard are seen in this illustration photo ... [+] taken in Krakow, Poland on January 29, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images) NurPhoto via Getty Images CME Group's stock (NASDAQ: CME) has largely traded sideways since the beginning of the year and has not seen much change as compared to the 17% rise in the S&P 500 over the same period. In sharp contrast, CME Group's peer Intercontinental Exchange (NYSE: ICE) is up 25% YTD. We be ...

Core Viewpoint - CME Group is set to launch two new wheat spread futures contracts on October 14, pending regulatory review, to enhance global wheat trading efficiency [1][2]. Group 1: New Product Launch - The new contracts include the CBOT Wheat - Euronext Milling Wheat No. 2 Spread futures and the KC HRW Wheat - Euronext Milling Wheat No. 2 Spread futures, both denominated in U.S. dollars and based on the spread between U.S. wheat futures prices and Euronext Milling Wheat No. 2 futures prices [2][3]. - These contracts aim to provide clients with innovative tools to manage wheat price exposure more effectively, reducing the need for transactions across multiple venues and allowing trading in a single currency [3]. Group 2: Market Context - The introduction of these spread futures contracts reflects the increasing globalization and interlinkage of the wheat trade, indicating a shift towards more integrated trading solutions [3]. - CME Group's offerings include a wide range of global benchmark products across major asset classes, which positions the company as a leader in risk management and opportunity capture for market participants [4].

CHICAGO, Aug. 27, 2024 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced it will further expand its cryptocurrency derivatives offerings with the introduction of Bitcoin Friday futures (BFF) on September 30, pending regulatory review. Sized at one-fiftieth of one bitcoin, these new weekly futures contracts will be cash-settled to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) at 4:00 p.m. New York time every Friday. A new BFF contract will be listed every Th ...

Core Viewpoint - CME Group is positioned as a compelling investment opportunity in the financial real estate sector, offering strong growth, dividend growth, and value at its current price [2][7]. Company Overview - CME Group is a leading global derivatives marketplace, facilitating trading in futures and derivatives based on commodities, energy, metals, and foreign currencies [3]. - The company operates similarly to a 'pick and shovel' investment, profiting from trading volume rather than price increases [3]. Financial Performance - CME Group reported a 13% year-over-year revenue growth to $1.5 billion in Q2 2024, achieving a quarterly record [4]. - Average daily volume increased by 14% year-over-year, with notable growth in energy (16%) and metals (42%) products [4]. Strategic Initiatives - CME is innovating in the digital space through a partnership with Google Cloud, establishing a co-location facility in Illinois to enhance global trading capabilities [4]. - The company plans to leverage AI and data capabilities to improve trading strategies [4]. Market Position and Valuation - CME Group has a strong market position with a fortress balance sheet, an AA- credit rating, and a low long-term debt-to-capital ratio of 9.7% [4]. - The company offers a dividend yield of 4.8%, supported by a 46% payout ratio and a 5-year CAGR of 9.2% [4]. - CME's current valuation at $207 reflects a forward PE of 20.9, which is favorable compared to its historical PE of 27 and peers with higher forward PEs [4][5]. Growth Prospects - The company is expected to achieve long-term annual EPS growth in the mid-single digits, combined with a near-5% yield, potentially delivering market-level total returns [5]. - CME's revenue growth outpaces that of peers like CBOE and Nasdaq, making it an attractive investment option [6]. Investment Thesis - CME Group is characterized by high profitability, strong growth prospects, and a robust dividend yield, making it well-positioned to benefit from ongoing demand for risk management products amid geopolitical and economic uncertainties [7].

Core Insights - CME Group has opened registration for the 21st annual University Trading Challenge, scheduled from October 6 to October 31, 2024, with a registration deadline of October 2, 2024 [1][4] - The challenge is designed for undergraduate and graduate students globally, allowing them to manage mock investment portfolios while addressing various marketplace risks [2][4] - Last year's competition featured over 400 teams and 1,865 students from 24 countries, with the winning team from Universidad De Guadalajara, Mexico [4] Educational Focus - The University Trading Challenge provides an interactive experience for students to learn about managing investment portfolios using a professional trading platform [3] - Participants will receive market-related data and news, including live updates from Dow Jones and The Hightower Report, to enhance their trading skills [3][5] - CME Group emphasizes the importance of risk management and global derivatives markets through educational initiatives like this challenge and other resources [5] Company Overview - CME Group is the leading derivatives marketplace, facilitating trading in futures, options, cash, and OTC markets, and providing tools for risk management [6] - The company offers a wide range of global benchmark products across major asset classes, including interest rates, equity indexes, foreign exchange, energy, agricultural products, and metals [6] - CME Group operates the CME Globex platform for futures and options trading, BrokerTec for fixed income trading, and EBS for foreign exchange trading [6]