Retail Sales. I guess they’re not buying paint.
September 16, 2025
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–On April 29, Harley Bassman, Convexity Maven, put out a piece “Chekhov’s Gun” which a friend forwarded to me. This was shortly after the ‘Liberation Day’ announcement and huge rips in VIX and MOVE. On page 4 he says, “I would propose that these jumps in the MOVE and the VIX are not short-term blips that will quickly resolve, but rather they may be permanent, or at least until the end of the Trump Presidency in 2029.”
Those blips did eventually resolve much lower as we saw last week. Perhaps a hopeful sign as it relates to current social turmoil. However, it’s also probably a good idea to remember in times of low vol that Chekhov’s loaded rifle is still on the financial stage, it just hasn’t been used yet.
https://www.convexitymaven.com/wp-content/uploads/2025/04/Convexity-Maven-Chekhovs-Gun.pdf
–Yesterday featured deflation regarding the idea of a 50 bp cut tomorrow, with a bit of pressure on near-term SOFR contracts relative to deferred. For example, SFRZ5 settled -2 bps at 9634.5, while SFRZ6 settled +2.0 at 9706.5 and Z7 settled +2.5 at 9699.5. Over the weekend, I suggested buying SFRZ5 9687.5/9712.5cs for 0.5 as a ‘disaster lotto ticket’. Yesterday, there was a buyer of 50k Z5 9675/9700cs for 1.0 and buyer of 20k 9668.75/ 9700cs for 1.5. In futures there was a new buyer of 70k SFRU6/SFRH7 six-month calendar for -10. This spread settled -8.5 (9700/9708.5). The short leg of the spread is the peak contract on the SOFR curve, SFRH7. In treasuries, 2 thru 30-yr yields eased 2 to 2.5 bps, with tens ending at 4.034, -2.3 bps.
–Yesterday it appeared from pre-market trade that NVDA might gap open lower. It actually ended nearly unch’d. I only bring it up again because I saw several posts that say NVDA is now worth more than the capitalization of Canada. And that’s with Gold making new all-time highs. Just stupid.
–Today’s news includes Retail Sales expected +0.2 headline and +0.4 ex-auto/gas.
–Saw this tidbit yesterday: ‘Nobody Special’ posted that paint retailer/manufacturer Sherwin Williams (SHW) suspended making matching 401k contributions a week or so ago. Perhaps interesting as anecdotal evidence regarding weakness in housing.
