Virtual evaporation
February 3, 2022
–BOE and ECB today. FB plunged 20% on earnings miss after close, amazingly enough that’s about $175 billion in virtual value. Here’s a good quote from Reuters: “Investors looking at Meta are starting to realize that buying their stock is no longer mostly an investment into their ad platform. Investing in Meta now looks more like a commitment that you believe that the metaverse will replace much of the internet consumer’s experience today.” Flynn Zaiger, CEO of Online Optimism. [doesn’t sound all that optimistic] Twitter also down 4% pre-open and Spotify -5.7%. Bitcoin pressing down toward 36k.
–Once again, new low yesterday in red to green pack spread in EDs. That’s year 2023 to year 2024, and the pack spread settled just 13.625. The initial one-year spread is EDH3/EDH4 which settled 32.5, but the last spread, EDZ3/EDZ4 is just 1 bp.
–ADP was a huge miss at -301k. Jobless claims today expected 245k. Other news includes Nonfarm productivity expected 3.2%, Markit PMI Composite, Service ISM expected 59.5 and Factory Orders, with the Employment report tomorrow. With the White House warning of a weak employment number and ADP apparently confirming, the surprise would now be a stronger than expected figure. There are still 278k open in TYH 127p, which settled 10 with -0.20 delta; settlement is 2 weeks from tomorrow.
–Tens fell 3 bps in yield yesterday to end 1.766%, but futures on the longer end rejected highs that have more or less defined the top end of the range. For example USH high yesterday was 156-17 but the settle was 156-00. The high on Jan 7 was 156-28, then 156-19 on Jan 24.
–Dem NM Senator Ben Ray Lujan is in the hospital recovering after a stroke, but in the short term that means Dems no longer have a margin in the Senate.
