Rise and Fall

June 18, 2020

But rather than finish his studies, XXXX became a gambling addict, lost all his tuition money, dropped out of school and suffered a nervous breakdown. It would not be his last.

–It might be added, that since school was now online, he didn’t think it was worth the same tuition money anyway, and the gambling addiction was related to stocks.

–Yields edged slightly lower yesterday, with tens -2.3 bps to 73.1.  Treasury vol oozed out, with TYU 138.5 straddle moving from 1’63 at the open to 1’56 settle.   USU 176^ settled 6’32 on Tuesday and 6’14 yesterday.  However, bond vol relative to FV vol as a ratio is as high as I’ve seen it.  The DV01 of US is exactly 4x that of FVU, yet the vol ratio is 5.9x higher in US.  The ratio of the ratios is thus 1.47, previously it had been running around 0.7.  The obvious trade is to sell US vol and buy FV, but with YCC it’s anything but obvious.  

–Today’s news includes Jobless Claims, expected 1.3 million, Philly Fed expected -21 from -43.1 and Leading Indicators which is expected to improve…duh, 2 of its components are stocks and M2.

–The Turkish Lira is again on a path lower as Turkey launches bombing and ground assault operations in Iraq against Kurds. 

–In spite of the SEC taking issue with the Hertz plan to extract $1 billion from Robinhooders to transfer to creditors, HTZ still finished a touch higher at 2.00.  If you’re in the market for a used car, look here: https://www.hertzcarsales.com/used-cars-for-sale.htm?geoZip=33060&geoRadius=1000

–The gambling addicts that have driven some stocks to outlandish levels have yet to suffer nervous breakdowns.  ‘Bro, it might be better to get out of HTZ and buy NKLA’.  The latter, by the way, was at $10 per share in early Feb (pre-Covid) but shot up to nearly ten times that value and is now 64, giving the company a market cap of $23 billion.  My bloomberg terminal says the company has 4 employees and no revenue.  

–By the way, the initial quote above refers to none other than Nikola Tesla.


Posted on June 18, 2020 at 5:35 am by alexmanzara · Permalink
In: Eurodollar Options

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