April 12. No one likes the Winklevoss twins

–Another quiet day in US rates yesterday; yields edged lower.  April midcurves expire today in dollars, the Blue April 9887.5^ was sold heavily at 4.0, as of this writing the calls are 4 in the money (9891.5).  A weak retail sales number could cause a gamma scramble to the upside.
–Today’s news includes Retail Sales expected 0.0 with +0.1 less autos, and PPI expected -0.2 with Core +0.2.
–My next topic was going to be worrisome economic trends, but I will instead go with my favorite Larry Summers quote: “One of the things you learn as a college president is that if an undergraduate is wearing a tie and jacket on Thursday afternoon at three o’clock, there are two possibilities. One is that they’re looking for a job and have an interview; the other is that they are an a**hole. This was the latter case.”  He was referring to the Winklevoss twins.  The world must agree, because as soon as news came out that they owned 1% of bitcoin supply, the market plunged from 266 to 78, faster than Nelson Bunker Hunt could say “silver corner”.
–Note that the initial high in TYM3 post-Cyprus depositor tax was 131-24…now pushing for 133.
–HuffPost notes that the Fed minutes revealed that several members were concerned about the high levels of student debt, which may be an impediment to future consumption.  I have noted before that the public has substituted relatively high rate revolving credit card balances with lower rate student loans. Total debt hasn’t changed much… And, the federal gov’t is the largest issuer of student loans.
–(Reuters) – Stockton and San Bernardino, the two California cities that have filed for bankruptcy protection, are both considered test cases in the epic battle over whether municipal bondholders or pensioners will absorb most of the pain when a government goes broke. San Bernardino has decided to pay Calpers (pensions) and not the bondholders…the point is: SOMEONE doesn’t get paid, and it’s going to happen more and more.  The only question is who?

Posted on April 12, 2013 at 5:33 am by alexmanzara · Permalink
In: Eurodollar Options

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