Nov 21. GETTING SCARY

–An eighth day in a row that TYZ settled higher, but just barely.  All eurodollar contracts settled slightly lower on the day despite weak equities (SPX -1.8%) and a renewed plunge in oil.  Around the time of futures settlement of rates, CLF9 was -3.90 at 53.30, which has been a breathtaking loss from the high set in early October above 76.
–Continued buying of ‘Fed skips March’ trades.  For example EDH9 9725/9737c 1×2 heavily bought 0.5 and the same call spread was bought 1 to 1 with the additional sale of the 9700p to finance.  EDH9 9737c added 50k in open interest with 97k in 9737c.  EDH9 settled 9717.
–Many are taking off for the holiday, but it is a full session today.  The feel of the market is one of forced exits and adjustments going into thin conditions for year end.  Is it just a liquidation of high-priced tech?  Stocks should be taking solace from re-calibrated Fed expectations.  Bitcoin worth a mention here…in December of last year it was near $20,000.  Now $4600, new low yesterday.  The ultimate tech unwind?  Recall that nasdaq lost 80% of value from the parabolic top in 2000 to the ultimate low in 2003.  But it didn’t mean the death of tech companies.
–There was an interesting story on the Washington Post about Congress attempting to solve the multi-employer pension problem (which appears to be a small subset of pension problems in general).  The gov’t agency involved is the Pension Benefit Guaranty Corp which itself has financial difficulties.  The end proposal is due by Nov 30.  You know and I know that it will not get done.  However, it’s nice to see someone take a stab at it.  The article captures the crux of the problem….too many promises to too many retirees, which forces payments from some and cuts to others that had absolutely nothing to do with original bad decisions and management.  If there WAS a breakthrough on this issue which created a template to deal with the broader problem, it would lift a huge weight from the economy.
https://www.washingtonpost.com/business/economy/lamwakers-consider-multibillion-bailout-for-troubled-pensions-retirees/2018/11/20/14f28634-ecd5-11e8-96d4-0d23f2aaad09_story.html?noredirect=on&utm_term=.1583b38d2cf6
Posted on November 21, 2018 at 5:19 am by alexmanzara · Permalink
In: Eurodollar Options

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