Sept 12. Why, he stubbed his TOE!

–Pneumonia?  She’s been coughing for months.  Who’s her doctor?  Phil?  In any case uncertainty is rising in front of the US election.  In Europe, following up on Draghi’s comments last week that ‘structural reforms need to be substantially stepped up’, Dijsselbloem came up with this solution:(Reuters)  “Times are changing. You need to pay your taxes in a fair way. Part of that would be in the U.S., part of that would be in Europe. So get ready to do that,” Dijsselbloem added.  Is that what Mario meant?

–In Japan the ten year JGB is about to pierce the zero barrier (back to positive).  Against this backdrop Lael Brainard will address Fed policy in a speech today.  In her last speech on June 3, she noted risks to the downside in  inflation, and asymmetrical risks in terms of tightening policy.  She voiced concerns over Brexit (we seem to have gotten past some of the worst there), and China, where the yuan continues to push lower, but in a more gradual fashion.  A change in tone to just slightly more positive will be a green light to hike, but now the political pressure to hold off until after the election will be intense.
–Quarterly options in stock indices expire on Friday.  As has been well reported, the two months previous to Friday were a flat line, perfect conditions to embolden premium sellers.  Friday was a gamma wake up call.

*From Mark Twain’s Huckleberry Finn:
“Well, ther’ ain’t no sense in it. A body might stump his toe, and take poison, and fall down a well, and break his neck, and bust his brains out, and somebody come along and ask what killed him, and some numskull up and say, ’Why, he stumped his TOE.’ Would ther’ be any sense in that? NO. And ther’ ain’t no sense in THIS, nuther.”

Posted on September 12, 2016 at 5:23 am by alexmanzara · Permalink
In: Eurodollar Options

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