June 6. Buffet, “But I own Apple”

–Quiet session Tuesday.  Early news that the ECB may debate QE exit at next week’s meeting, along with (related) weakness in Italian banks caused the eurodollar strip to erase Monday’s losses (+5.0) but that bid faded as the day went on and ED contracts mostly settled +2.0 to +2.5 (reds through golds).  From this morning (RTRS)

“Robust growth is making the central bank increasingly confident that inflation is on its way back to target, ECB chief economist Peter Praet said on Wednesday, increasing the likelihood it may use a meeting next week to reveal more about the end of its bond-buying program.”  EUR is at a new recent high, but this rally is tepid and likely to stall soon.

–Mexican peso made a new low as Kudlow said Trump was thinking of splitting NAFTA negotiations.  After the election, MXN had traded just over 22.00, and then strengthened to 17.50 one year ago.  Yesterday the high was 20.47, weakest since February 2017 and above the 0.618 retracement (20.29).  This adds to perceptions of stress in emerging markets related to dollar-denominated debts and increased US interest rates.

–I mistakenly thought Productivity and Unit Labor Costs were released yesterday, but they’re slated for this morning, expected +0.5 and ULC +2.8%.

–ESM/ESU roll traded as low as 3.90 yesterday, a new low for the cycle.  Volume in the roll was about 38k, about 10% complete so far.


–Remember when they said Buffet was all washed up during the dot.com era, because he didn’t understand the new-fangled technology companies?  Here we go again.  Berkshire near the low of the year and NY Fang index at new highs.

Posted on June 6, 2018 at 5:24 am by alexmanzara · Permalink
In: Eurodollar Options

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