Sept 29. Germany passes EFSF vote

–Copper seems to have been foretelling the direction of stocks.  Yesterday it plunged fully 25 cents late in the day to 318.  Spike low early Monday morning was 307.15.  Stocks had a late sell off as well, and the Shanghai Composite continues to make new lows. SP500 fell 2%.
–Interest rates were fairly quiet.  Vol slipped… seller of about 12k TYX 129p.  Also FVZ1 122.5/123 strangle was sold in size of about 13k from 62 to 61. (New, adding to position, settled 61).  Curve flattened after large steepener Tuesday.  Red/gold pack spread was 185.5 Monday, rose to 195 Tuesday, and fell to end just above 190 yesterday. 
–Today’s domestic news includes GDP revision expected 1.2%.  Jobless Claims 420k.  7 year auction. Awaiting German vote at time of writing.
–From the AP, Federal Reserve Chairman Ben Bernanke: Long-Term Unemployment A ‘National Crisis’.  ZH reports that Bernanke said the Fed might have to do more if inflation expectations decline, in response to a question after the speech. 
–An example of Greece in the US is Illinois: The state will end FY2012 with a deficit of $8.3 billion according to a Sept. 26, 2011, study by The Civic Foundation. Its study noted that although the state reduced spending, any benefits were negated by higher pension costs and increased borrowing costs.(sunshinereview.org).  Though income taxes were raised from 3 to 5%, medicaid and pension costs keep rising.  Chicago is in similar budget bind, facing $650 million budget hole.  Fees and taxes are raised, businesses leave or adjust, and expenses keep rising for the gov’t.  With long term rates at new lows, unfunded pension liabilities continue to grow.

Posted on September 29, 2011 at 7:48 am by alexmanzara · Permalink
In: Eurodollar Options

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