We’re all Krugers now

July 24, 2019

–Stocks ramped up in the afternoon on news of face to face talks with China.  However, a US Dept of Justice probe into big tech turned Nasdaq, which is down 50 as of this writing.  Silver near a new high, euro testing the year’s low.  

–Yields rose yesterday, up 2 to 3.5 bps across the board, with tens +2.5 at 2.072%.  Notable morning weakness in near euro$ contracts as the debt-ceiling deal was announced, with the implication that 1) more bills may hit the market and 2) if all semblance of fiscal restraint is out the window, the Fed may not have to do as much.  Decent size front call liquidation, as an example, 35k EDZ9 9800/9837/9875 call flies were sold at 7.0 vs 9797/97.5.  Settled 6.75 vs 9796.0s. 

–First it was the Fed that opened the liquidity spigot, now it’s the Federal Gov’t opening up the budget for larger deficits.  It’s like the Seinfeld episode where George is working for Mr Kruger of Kruger Industrial Smoothing, who doesn’t really care about anything.  “Oh, it doesn’t really matter, there’s no inflation right?”  I have the feeling we’re going to get much more than we bargained for on the inflation front.  Or maybe there will simply be a big realignment of currencies (JP Morgan released a note saying the USD may lose its reserve status.  In any case, this set-up isn’t the stuff that should instill confidence in corporate america. 

–WSJ has a clip noting that WeWork may try to go public in September, of course they’re considering a name change pre-IPO to Beyond Work, which ought to make it sail through the capital markets (in a seasonally challenging part of the year for equities)


Posted on July 24, 2019 at 5:20 am by alexmanzara · Permalink
In: Eurodollar Options

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