Assassination Tango

August 13, 2019

–Only 97 years and 8 months to go.  In June 2017 Argentina famously auctioned dollar denominated 100-year bonds in size of $2.75 billion.  Last week, they traded 74. and yesterday, 54.  You wanted yield, right?  Attached is a chart of Merval index.  I guess the financial markets aren’t all that wild about socialists.  Shouldn’t Argentina try to buy these back and book a billion or so? 

–I missed this but the US Postal Service reported Q3 results last week:  a loss of nearly $2.3 billion on revenue of $17.1 billion.  Blew away UBER, which had reported a loss of $5.2 billion on revenue of $3.17 billion.  I think UBER wants to deliver stuff too.  Maybe the gov’t should just have an IPO for the USPS.  Some other global assets have negative yields too, and they seem to enjoy robust demand. :- /

–The US gov’t budget statement was released yesterday.  No surprise, but the deficit ten months into the fiscal year of $866.8 billion is more than all of last year’s.  And the US 30 year bond yield came within 2 bps of an all-time-low, closing at 2.129%.  I marked the ten year inflation-indexed note at positive 2.5 bps.  In other words, “real” yield has vanished and may turn negative.  The spread between the ten year treasury and tip is  1.614%, supposedly related to long term inflation expectations.  Today CPI is released, with an expected year-over-year Core of 2.1%.  Monthly expected +0.3 headline and +0.2 Core.  

–No inflation in grains: yesterday’s crop report sent corn down the 25 cent limit, and is lower yet this morning, having erased the entire rally from May associated with flooding and reduced planting.  Dec Corn now 3.81 having traded as high as 4.70 in June.  So gold making new highs this morning at $1535/oz (up $18), doesn’t have to do with inflation, it’s all about a lack of trust in the world order and fiat currency.

–Yields, of course, fell yesterday, sparked in part by the deteriorating situation in Hong Kong and a desperate search for safety.  This weekend I mentioned that a lot of prices were re-visiting lows from the middle of 2016.  Add to that the share price of the biggest shipping company in the world, Maersk. And add $/yen, which is nearing 105, the lows of the past year and a half.  The low from 2016 was around 100.  –The ten year yield fell 9.4 to 1.639%, with the 30y as mentioned above, falling 11.7 bps to 2.13%.  In treasuries, steepeners were exited (5/30 closed at a new recent low of 64.6, down 4 on the day).  There was a buyer of 30k TYV 138.5c for 2/64’s; I reckon that strike to be around 75 or 80 bps.  In dollars, a buyer of 90k EDV 9850c for2.5 was an exit; settled 2.75 vs 9820.  The other large trade was a seller of 75k EDH0 9862/9900cs at 8.5, which appears to be a roll down of short 9900 calls into the 9862 strike.  (settles 14.0 and 5.5 ref EDH0 9846.5).   

–The title to this note is just the first thing that popped into my head.  Assassination Tango is a 2002 movie with Robert Duvall who plays a hitman sent to Argentina to kill a general.  When his plans get delayed, he is drawn into the world of tango.  Sort of ties Argentina and Jeffry Epstein together.

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AP Moller Maersk

Argentina’s stock market below

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Posted on August 13, 2019 at 5:11 am by alexmanzara · Permalink
In: Eurodollar Options

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