Aug 22.

Aug 22.   Bernanke’s Jackson Hole speech is Friday, probably the biggest event on this week’s calendar.  Over the weekend, I read several stories relating to european banks’ Tangible Common Equity and comparisons with Lehman, which were not, as you might suspect, positive.  There was also a last minute rescue of a smaller Greek bank, Proton Bank.  As equity prices of banks deteriorate, the crisis threatens to enter a culminating negative whirlpool.  The market believes that tarnished assets will swamp equity…the official response hasn’t restored confidence.  There are some suggestions that the Fed greatly expand dollar swap lines with the ECB, though I’m not really sure if the global system perceives the Fed as having enough credibility to be the lender of last resort to the world at this point.

–As of Sunday night it appears as though Gaddafi might be out in Libya.  A good thing in terms of the worst of the conflict drawing to a close, but, like the financial crisis, there’s not really the intrastructure in place to assure a smooth transition. The theme of the last several years is to kick the can down the road, both financially and geopolitically.

–Slight new low in 2/10 treasury spread to 187.  Back month vol was firmer in dollars.  Stocks continue to trade defensively while waiting for financial authorities to announce dramatic new measures (whick seem to be losing potency).

Posted on August 22, 2011 at 12:41 pm by alexmanzara · Permalink
In: Eurodollar Options

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