July 10. Crude oil and copper sending different signals on economic strength

–Remarkably quiet in rates even as stocks soared.  The British pound was hit after the resignation of Boris Johnson from May’s cabinet, but it’s still holding above the low set in late June.  Oil was lower early in the session but came back to close positive.  CLU8 71.98 up 41 cents…highest high has been 72.85.  Premium sales were the main theme in rate options.
–Today includes NFIB small business optimism which was 107.8 last month, the highest since 1983 when it hit 108.0  Three year note also auctioned.  Wednesday and Thursday bring inflation data, PPI then CPI along with ten and thirty year bond auctions.  While China’s stock market continues to engage in a slight rebound, note that Copper (HGU8) had a strong symapthetic bounce with SHCOMP and CNY yesterday, but has nearly completely reversed the move this morning.
–Interesting article on ZeroHedge outlines runaway pension growth in Illinois.  “In 1987, pension promises made to active workers and retirees in the state’s five state-run pension plans totaled just $18 billion. By 2016, they had ballooned to $208 billion.  

That’s a cumulative 1,067 percent increase.
Contrast that to the state’s budget (general fund revenues) which was up just 236 percent over the same time period. Or household incomes, which were up just 127 percent. Or inflation, up just 111 percent.  Promised pension benefits have blown past the ability of the state, the economy or taxpayers to pay for them.”
According to a Chicago Tribune story in May 2018, “The funding shortfall across Illinois’s five retirement systems climbed to $137 billion by last June, a jump of about $17.8 billion since 2015, after the government for years failed to made adequate contributions.”
Chart below from ZeroHedge post


Posted on July 10, 2018 at 5:24 am by alexmanzara · Permalink
In: Eurodollar Options

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