So crazy it might just work

September 14, 2021

–CPI today expected 4.2% yoy with Core 5.3%.  Yesterday featured small declines in rates, with tens down 1.7 bps to 1.322%.  Trade of the day was a buyer of 40k 2EH 9950c with 50k 3EH 9950c at a package price of 11 to 13.5.  Settlements were 1.75 in 2EH vs 9889 in EDH’24 and 1.25 in 3EH vs 9856.5 in EDH’25, so 13.25 in pkg 4:5.  Open interest in the blue March strike was up 46k to 208k. 2EH calls have 72k open.  3EH 9950c were originally bought in size of 80k on Aug 12, paid 2.0, and again on Aug 23, 2EH / 3EH 9950c strip 1:1 4.5 to 4.75 paid for 10k. 
Last summer during the worst of COVID the first two blues traded above 9950.  Perhaps odds of a repeat aren’t that great… but I’ve seen crazier things.  Wingy buys?  TYV 135c and 131p which expire one week from Friday, were both bought for 1, about 15k each.  But nothing beats this as a lotto ticket flier:  Bankrupt Chicago ran a full page ad in the Dallas Morning News trying to lure business from Texas to Chicago.  Nice use of taxpayer funds. 

–Bloomberg Commodity Index closed at a new high of 97.67, up 25% ytd.  Hasn’t been this high since 2015.  The last big upward trend in BCOM from the end of 2001 lasted 6.5 years for a total gain 171%.  The low in April 2020 was 59 (according to BBG, that’s the low since 1974!).  At its current level BCOM is still 59% below the high of 2008.  Of course, that’s when WTI surged to $140/bbl.  Now it’s only half that amount with CLV1 70.91 this morning.  The AP reported over the weekend that, “The U.S. has removed its most advanced missile defense system and Patriot batteries from Saudi Arabia in recent weeks, even as the kingdom faced continued air attacks from Yemen’s Houthi rebels, satellite photos analyzed by The Associated Press show.”I’m not making the leap that the world might perceive that the US is abandoning SA, but at least this time we’re getting the hardware out first.  Puts a floor under the price of oil, I would think.
https://www.politico.com/news/2021/09/11/missile-defense-saudi-arabia-511320

U.S. pulls missile defenses in Saudi Arabia amid Yemen attacks – POLITICOForeign Policy. U.S. pulls missile defenses in Saudi Arabia amid Yemen attacks. Prince Sultan Air Base, some 70 miles southeast of Riyadh, has hosted several thousand U.S. troops since a 2019 …www.politico.com


–From Cass Transportation yesterday: “The overall cost of shipping, across a mode mix reflective of the Cass customer base is up approximately 27% year over year.”  A Maersk exec had this to say last week, “We need lower [consumer demand] growth to give the supply chain time to catch up, or differently spread out growth.  Over a long period of time, we will need to recover efficiency.”  At the same time Maersk CEO is calling for fossil-fuelled ships to be phased out.   

Posted on September 14, 2021 at 5:45 am by alexmanzara · Permalink
In: Eurodollar Options

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