April 20. Big blues for Big Blue (IBM)

–“My name is George.  I’m unemployed and live with my parents.” “I’m Victoria, Hi.”


–That’s from the Seinfeld episode where George Costanza does the opposite.  Funny.  Except that 31% of 18-34 year olds now live with their parents (Census 2016).  In 1975, 57% of this age group lived with a spouse, now that’s down to 27%.  http://www.cnsnews.com/news/article/terence-p-jeffrey/census-more-americans-18-34-now-live-parents-spouse

–I’m not sure that statistics in the above story make much difference.  The ‘living with parents’ percentage went from 26% in 1975 to 31% now, so it’s likely more of a statement about marriage than anything else.  Although, the unemployment rate in 1975 was around 8.4%, so one would think that economic circumstances aren’t as constraining in terms of leaving home.  Things change.  IBM was a pretty hot cutting edge company in 1975.  https://www.youtube.com/watch?v=52ktEpjIhnk     Now it’s had 20 quarters of declining revenue and fell 5% yesterday.

–Oil also had a hard sell off yesterday, declining over 3% on a closing basis.  However, despite renewed deflationary forces yields edged higher, with 10’s up 2.5 bps to 220.  The peak one-year eurodollar spread had been the front EDM7/EDM8 spread, but has now pushed back further on the curve to EDZ7/EDZ8, the former settled at a new low of 32 and the latter at  34.0.  Pretty subtle change, but indicative of a more drawn out process of ‘normalization’.

–French round one election this weekend.  If there’s concern about Le Pen it’s not registering in interest rate premium.  With 23 days to go green May 9812.5 straddle settled 19; the underlying contract has rallied 28 bps since March 31.  Do the opposite.  Buy stocks, sell vol. (But is that even “the opposite” anymore?).

–News today include comments by Powell, Jobless Claims, Philly Fed (expected 25.5 from 32.8 last) and Leading Indicators, +0.2.

Posted on April 20, 2017 at 5:18 am by alexmanzara · Permalink
In: Eurodollar Options

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