Oct 3. Employment week

Oct 3.  The dollar made another new low Friday while gold edged to a new high.  Crude oil also surged higher the last three days of last week.  The prospect of QE is pushing some markets up, but stocks seem noncommittal, buoyed by liquidity and weaker dollar, but anchored by generally weak economic data.  For example, Friday’s ISM had a high price component, and orders relative to inventories was negative.
–BofA, like other banks, is suspending foreclosure activity because of improper documentation.  As many have noted, this is sort of a circular stealth stimulus, as households don’t pay lenders, who in turn are backstopped by the gov’t. However, the whole situation probably crimps lending at the margin.
–SEC concluded that one large order touched off the “flash crash”.  CME response: it was a small order relative to total volume, the market was already under pressure for macroeconomic reasons, and half of the particular order was filled on the way back up!  Implications: SEC is worthless agency… there could easily be regulation that limits any given stock to a fall of only a few percent.  If downside limits are enacted it should make downside insurance, i.e. puts, a bit more expensive.

Posted on October 3, 2010 at 5:57 pm by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply