Uneasiness about financial system returns

Dec 18.  German business confidence surprised on upside today.
–Yields fell yesterday as uneasiness sets in again about the financial system. Ten yr  dropped 10bps to close below 3.5%.  Citi fell 7%, now hovering about halfway back from the crisis low of 1 and the high just over 5.  JPM made a 5 month low. Discover (credit cards) fell over 9% on rising delinquencies.  New recent low closes for Goldman and Morgan Stanley, the latter of which is walking from 5 San Fran buildings…giving back to Blackrock..(BBG) “This isn’t a default or foreclosure situation,” Barnes said. “We are going to give them the properties to get out of the loan obligation.”  Isn’t that what default is?
–NY Times reports FNM, FRE, GMAC, AIG all want more govt funds…”wards of the state.”  CA continues to have budget problems as revenues lag.  NYC making deep cuts in public transit. Bloomberg reports that if Greece is cut again the ECB wouldn’t be able to accept collateral from a member state.
–Heavy selling in TYH 115/120 strangle, about 30k down to 41, settled 42. New position attributed to west coast fund mgr.  In the last cycle, it was the 112/120 strangle that was sold. From BBG: Bill Gross’ cash position is highest since the crisis.

Posted on December 18, 2009 at 5:19 am by alexmanzara · Permalink
In: Eurodollar Options

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