Paper claims
July 13, 2021
–New high SPX and Nasdaq on a light volume day. Yields edged slightly higher with tens ending at 1.363%. CPI today expected +0.5 month/month and 4.9% year over year. Core expected 4.0% from 3.8 last. Yesterday the NY Fed released consumer expectations of inflation at 4.8%, up from 4.0% at the last survey. All of which points to solid demand at today’s 30 year auction which was sporting a w/i yield of NEARLY 2% yesterday afternoon. Why does the market accept a negative real return of a few percent on long treasuries? Because of the Fed backstop. Perhaps Powell will have a different take on it as he gives semi-annual Congressional testimony tomorrow.
–As a preview to tomorrow’s congressional questioning: There’s an amusing op-ed rant in the Guardian by someone named Hamilton Nolan that addresses the wealth gap in the US. He sets his piece up by focusing on the Sun Valley conference. “Here, America’s wealthiest mega-billionaires gather with the chief executives of America’s most powerful companies, the director of the CIA, and America’s most worthless pseudo-journalists (hello, Anderson Cooper) to develop the social and business connections that allow the top 0.00001% of earners to continue to accumulate a share of our nation’s wealth that already exceeds the famously cartoonish inequality of the Gilded Age of Rockefeller and Carnegie.” Not a single mention of the contribution of the Fed’s and the Biden administration’s stimulus measures that have turbo-powered stocks and real estate. Mr. Nolan’s solution? Put them in jail. Quite thoughtful.
–A friend posted a tweet yesterday from LeoNidasThisISSparta (I could not find the original tweet) who said he took 1 silver contract into expiration and was promised delivery June 15th, delayed to June 22, then pushed back to June 29, then to July 1. They (I suppose he means the exchange) continually offered to cash-settle, which he finally accepted. His conclusion, “I bet no one is actually getting silver delivered.” I have a suspicion that the physical commodity, no matter what it is, is likely to become much more sought after than the derivative. I’ll be keeping an eye on Dec soybean oil, now near 64 vs a high of 66.67 in June.
