“Earnings” season

July 13, 2020

–Friday saw a bounce in the curve with 2/10 up 2.4 bps to 48 bps, and red/gold pack spread up just over 5 to 45.25.  Stocks continue to rise and are higher this morning as earnings season kicks off.  JPM, Wells and Citi all report tomorrow.  As Nasdaq soars to new all-time highs, with SPX about 6% from new highs, it’s somewhat interesting to look at how the banks stack up.  JPM, down 32% from the year’s high.  Citi about 36% off the high, Wells down 53%.  The five-year treasury yield and 3m libor are within a few bps of each other, and both are under 30 bps.  Bloomberg reports on a “…steady drumbeat of sad bankruptices.”  COVID cases are increasing.  In this environment, the investment grade bond etf LQD is making new all-time highs (thanks RL). While these bits of info might indicate a tough environment for financiers, banking doesn’t represent the ‘real’ economy.  Silver does, and that’s at a new high this morning with SIU $19.52.  GCQ0 is not quite at a new high, now $1813/oz.  

–There’s an EU summit at the end of the week, apparently good feelings all around as differences are papered over.  

–If I’m reading this right, the June monthly budget statement for the US gov’t is released today, expected at $863 billion deficit.  That used to be on the high side for a YEAR.  So we take that money and we buy stocks right?  Well, not directly, we give it to people and THEY buy stocks.  I don’t know what this world is going to look like in a year, but EDM’21 options have 336 days to go.  The 9975 puts, which are 7 out of the money, trade 6.  Whatever else happens, I guess we know with certainty that libor isn’t going above 31 bps.

With all the negative news about nursing homes and care facilities, here’s a good one:

Posted on July 13, 2020 at 5:38 am by alexmanzara · Permalink
In: Eurodollar Options

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