Jan 16. Increased revenue visibility

–(Reuters) “The China Banking Regulatory Commission (CBRC) said late on Saturday in a statement that its priorities included increasing supervision over shadow banking and interbank activities.”  Not much of a surprise as it’s already having an impact.  BBG reported 2 weeks ago that Jack Ma’s Ant Financial was suspending bond sales backed by consumer loans, after having issued $37 billion in 2017.  In what I suppose might be called related news, China is cracking down on crypto, as is S Korea, the net result of  which is a cut in bitcoin to nearly half its recent high (trading under $12k as of this note).  In other news Germany is buying renminbi for reserves.  I don’t know if the above factors are contributing to USD weakness, but yesterday the euro continued its run to recent highs.  Now assuming the mantle of parabolic levitation is the US stock market, with ESH trading over 2800 this morning.  If the flow from Asia can’t be funneled into bitcoin, then park it in US stocks.

–Weakness in the front end of the market yesterday with EDH8 trading 9814.0, over 23 bps lower than the final settlement of EDZ17.  The March hike is priced; it’s time to look further back the curve.  However, what we see further back on the treasury curve is flattening, with continued buying of the long end (USH near 151-00). On the eurodollar strip, red/gold pack spread is printing -2 this morning, which puts it near 21; the low of the move has been 19.25.

–It’s worth noting the rapid collapse of UK construction firm Carillion, announced yesterday.  This firm had 43k on the payrolls.  “Bricks and mortar” as Lenny Cole from RocknRolla might say.  From the FT: “Carillion’s journey from reporting ‘an encouraging start to the year’, ‘new orders’ and ‘increased revenue visibility’, to writing down of its construction contracts by £845m, to struggling with debt and unpaid suppliers, to entering compulsory liquidation has taken…just 258 days.”

Posted on January 16, 2018 at 5:22 am by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply