Soft bank… getting softer

Sept 8, 2020

–Yields surged Friday as stocks rebounded, with tens up 9.4 to 71.6 and thirties up 12.2 to 1.463%.  Curve steepened.  However, the bounce in stocks off Friday’s lows has failed, with Nasdaq currently down 260 to 11289.  There have been a lot of stories about Softbank having been the ‘Nasdaq whale’ that took outsized call positions ($4 billion in premium), thus causing a gamma squeeze, which has now played out.  I saw a news report this morning claiming that Softbank had exited all positions.  I do not believe that, and what’s more, price action in the stock itself suggests it’s not true,  Softbank (9984 JY <equity>) was slammed yesterday by 7%, and is down 14% from Wednesday’s close to today’s low.   

–Currency wars aren’t likely to provide a tailwind.  Here are a few quotes from a Reuters article yesterday, going into the ECB meeting this week. “The dollar (DXY) has already weakened by over 10% against a basket of currencies since mid-March to a more than two year low, prompting ECB chief economist Philip Lane to warn last week that the exchange rate mattered, even if the ECB didn’t target it.  “If there are forces moving EURUSD around. that feeds into our global and European forecasts and our monetary policy setting” Lane said.  “Emerging market economies, which are largely dollar funded, will benefit, at least initially,” former ECB board member Benoit Coeure said. “Europe may need to find new ways to support its economy in the face of permanently lower US rates.” Trump’s comments about decoupling from China are also a weight on US stocks.

–NFIB small biz optimism was already released this morning at 100.2, stabilizing after a bounce off the low.  Consumer Credit this afternoon.

Posted on September 8, 2020 at 6:16 am by alexmanzara · Permalink
In: Eurodollar Options

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