What were you thinking?
May 21, 2026
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–Spirited bounce in US rate futures yesterday as crude oil reversed off the highs on another promise of ‘getting close’ on Iran peace plan. CLN6 settled 98.26 from Tuesday’s 104.15. US ten year yield fell 9.7 bps to 4.57%. FV led, down 10.3 bps to 4.223%. SFRM7, the lowest contract on SOFR strip, rose 12 to 9605. Heavy buying of SFRZ6 9600p was an exit; open interest fell 35k. Settled 17.5 vs 9616.
–This morning: (Yahoo) The S&P Global Flash Eurozone Composite PMI Output Index fell to 47.5 in May from 48.8 in April, marking a 31-month low and a second consecutive month below the 50.0 threshold that separates expansion from contraction. The services sector, which accounts for the bulk of eurozone output, bore the brunt. The flash services PMI fell to 46.4 from 47.6, the worst reading since February 2021, and well below the consensus forecast of 47.7. [Europe starting to buckle?]
–US Composite PMI released this morning is expected 51.8 from 51.7. Other data includes Job Claims 210k, Philly Fed 17.8 from 26.7, and Housing Starts. At the low in March, the US Bankrate 30y mortgage was 6.10. Last is 6.46.
–Plenty of news coverage of Spacex IPO. Expected to be priced June 11, with IPO June 12.
–Heavy June/Sept roll activity in 10y yesterday with price moving down from 9.75 to 8.50. TY has completed 18.7% of roll, while FV is 13.3% and TU is 13.0%.
–Just as I am getting ready to send: IRAN’S SUPREME LEADER HAS ORDERED THAT NEAR-WEAPONS-GRADE URANIUM MUST STAY IN IRAN, TWO SENIOR IRANIAN SOURCES SAY. ESM futures went from around unch’d to down 20.
–From Google: NVIDIA’s (NVDA) trailing twelve-month (TTM) Price-to-Sales (P/S) ratio sits at approximately 25.04.
Here is Sun Micro’s CEO Scott McNealy (thx YZ) in 2002. (We’ve dispensed with these sort of metrics in today’s market…)
“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes which is very hard. And that assumes you pay no taxes on your dividends which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?”
