Msft, Aapl, Googl, Amzn
January 13, 2020
–Yields fell and implied vol was hammered Friday in the wake of Friday’s payroll data which was slightly weaker than expected with NFP 145k and yoy earnings at 2.9% vs 3.1% expected. The ten year yield dropped to 1.821%, down 3.4 bps. The curve flattened with twos down only 0.6 bp to 1.568%. Euro$ curve flatter as well: reds +1.25, greens +2.375, blues +2.875 and golds +3.625.
–While stocks had a late day pullback, those losses have been erased this morning. VIX ended Friday at 12.6, with additional pressure likely today. In treasuries, with two weeks to go, TYG 129 straddle settled 0’43 and with six weeks, TYH 129 straddle settled just 1’14. New recent lows for vol.
–Iran admitted it shot down the Ukraine passenger jet in error. Internal protests in Iran have ensued, perhaps suggesting a lull in military activity.
–There’s an interesting piece on ZH quoting Morgan Stanley’s equity strategist Michael Wilson. He notes an unprecedented condition in which the top 5 companies make up 18% of the total market cap! I would add that total US stock market cap to GDP is at a record 154%, and the top 4 companies by market cap, AAPL, MSFT, Alphabet and AMZN, are 20% of GDP. Pretty amazing numbers, which Wilson attributes in part to extraordinary liquidity provided by the world’s central banks. If one uses Google instead of Alphabet, the symbol letters of the largest stocks can be reconfigured to spell MAGA. Pure coincidence, right?
–More of that CB liquidity will be forthcoming this week, as the Fed gets the market over the Jan 15th hump: gov’t auction settlement and tax date. The US/China Phase 1 signing is also scheduled to take place on Wednesday. CPI and PPI on Tuesday and Wednesday. GBP hit this morning, approaching late December low as GDP reported weakest since 2012.
