No Country for Old Men
September 15, 2023
You always pay too much. Particularly for promises. There aint no such thing as a bargain promise.
from the novel, No Country for Old Men
–I had seen on Wednesday that President Biden was scheduled to give an economic speech on Thursday. I skim a decent amount of news in the morning, and I really didn’t see anything mentioned about it today. I did find and watch the speech this morning. No real depth in Biden’s comments, though he did mention that unemployment has been under 4% for a record stretch of 19 months [amazing], and also asserted it takes sophisticated tax examiners to go through a trillion dollar income (huh?).
–The dominant news stories this morning are the removal/disappearance of the Chinese Defense Minister and the US Autoworkers strike.
–In terms of prices that aren’t a bargain, it’s not just promises. Live Cattle is exploding higher. Uranium making new recent highs (chart attached). And of course, WTI is making new highs with CLV3 over $90/bbl. Both inflationary… and a tax on consumers. In any case, ECB hiked yesterday, perhaps for the last time, as Lagarde said inflation has been too high for too long. She also emphasized lower forward growth estimates going forward. Sounds stagflationary.
–In the US the SOFR curve inverted further. SFRU4 and Z4 made new contract low settlements at 9523 (-4.5) and 9556.5 (-5.0). I’ve attached a chart of red/green pack spread which closed at a new recent low of -53.25, a reflection of the higher for longer theme. Longest inversion ever. Tens and thirties were both up about 4 bps yesterday to 4.286% and 4.383%. This morning treasury futures are lower. From settles of 109-24 and 119-02, currently TYZ is 109-18 and USZ is 118-18. There has been a lot of concern about high deficits and debt supply, and news like this doesn’t help: “the Biden administration is preparing to offer emergency economic aid to auto suppliers to protect them from any long-term damage in the event of a prolonged strike…”
–Industrial Production today, but equity option expiration today could be the most important aspect of today’s action. From BBG:
A $4 Trillion ‘Triple Witching’ Event Endangers Stock Market Calm
