Delusions
November 24, 2024 – Weekly Comment
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It is astonishing what foolish things one can temporarily believe if one thinks too long alone, particularly in economics…
The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.
—John Maynard Keynes, The General Theory of Employment, Interest and Money
Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.
― Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds
Chart above is by Guilherme Tavares @i3_invest posted 11/22. (thanks TS for highlighting and to YZ for MacKay quote).
The quotes above are perhaps somewhat contradictory. But the idea is that people can go mad alone (and perhaps help shape the maddening herd), or just run with the herd without the arduous effort of ever thinking about it. I think we’re in a ‘senses-recovery’ phase, but it might take a while.
The above chart represents that dynamic. According to BBG, market cap of NDX is $24.74T (NVDA is $3.47T), FTW5k -the Wilshire 5000- is $58.10T and GDP is $29.35T (St Louis Fed). The AI hype, as represented by the ratio of NDX to FTW5k peaked in June and appears to be reverting currently. By the way, this year’s peak is well above the dotcom surge in 2000.
I’m adding this X-post from last week from Arnaud Bertrand @RnaudBertrand
https://x.com/RnaudBertrand/status/1859446480198828360
The summary is that China sold $2 billion in USD denominated debt in Saudi Arabia at only a few bps above UST. Sort of a shot across the bow in terms of creating a parallel USD system. Here are a couple of interesting snippets:
This is where China’s strategy could become truly clever. China could use its US dollars to help Belt & Road countries pay off their dollar debts to Western lenders. But here’s the key: in exchange for helping these countries clear their dollar debts, China could arrange to be repaid in yuan, or in strategic resources, or through other bilateral arrangements.
In effect this would China placing itself as an intermediary at the heart of the dollar system, where the dollars still eventually make their way back to the US – just through a path that builds Chinese rather than American influence and progressively undermines the US’s ability to finance itself (with all the consequences this has on inflation, etc.).
In short this seems to be like some sort of Tai Chi ‘four ounces moving a thousand pounds’ (四兩撥千斤) move by China, using minimal force to redirect the dollar’s strength in a way that benefits China.
Last week I wrote about winning the war of incentives. Chairman Powell recently noted that emergency programs put in place during the pandemic were remarkable in that they were barely used; the fact that backstops were available restored market function. Same sort of idea.
Last week the US curve flattened. The 2y yield rose 7.2 bps to 4.367% while tens fell 1.8 bps to 4.406%. On the SOFR strip, the weakest contracts were SFRM5, down 10 at 9587 and SFRU5, also down 10 at 9596.5. By comparison SFRM8 and SFRU8 were UP 2.5 and 3.5 at 9619.5 and 9619. 2/10 spread is at risk of inverting again. In June this spread was negative 50 bps. On 9/25, just after the initial 50 bp cut, it was POSITVE 22.4. Friday was the lowest level since then. I guess it’s not too surprising…
We have a Fed wrestling with the idea of a higher neutral rate. We have a Federal Gov’t that last fiscal year ran a deficit close to 7% of GDP. The new economic orthodoxy is that issuance of high-yielding t-bills into affluent hands is stimulative, as interest payments become a more significant part of income. Now, the Federal Gov’t is being threatened with a serious diet (sans Ozempic). The big tech companies (many companies really) derive large amounts of revenue from the government. At the same time German’s 2y is imploding, down 13 bps on the week to 1.99%. Resulting strength in USD makes our exports more expensive. It’s not necessarily the case that restraint in fiscal activity causes recession, but coupled with a Fed that is less inclined to ease, it’s a significant risk.
On this holiday shortened week, we have FOMC minutes on Tuesday afternoon. Wednesday includes 3Q GDP revision, Durables, and most importantly, PCE price data. Month/month expected 0.2 with Core 0.3. Year/year expected 2.3 from 2.1 and 2.8 from 2.7. No data on Friday.
| 11/15/2024 | 11/22/2024 | chg | ||
| UST 2Y | 429.5 | 436.7 | 7.2 | wi 434.4 |
| UST 5Y | 429.4 | 429.6 | 0.2 | wi 428.6 |
| UST 10Y | 442.4 | 440.6 | -1.8 | |
| UST 30Y | 459.7 | 459.4 | -0.3 | |
| GERM 2Y | 212.2 | 199.1 | -13.1 | |
| GERM 10Y | 235.6 | 224.2 | -11.4 | |
| JPN 20Y | 188.4 | 189.0 | 0.6 | |
| CHINA 10Y | 207.3 | 208.0 | 0.7 | |
| SOFR Z4/Z5 | -57.0 | -51.0 | 6.0 | |
| SOFR Z5/Z6 | -5.5 | -12.5 | -7.0 | |
| SOFR Z6/Z7 | -1.5 | -3.5 | -2.0 | |
| EUR | 105.36 | 104.18 | -1.18 | |
| CRUDE (CLF5) | 66.92 | 71.24 | 4.32 | |
| SPX | 5870.62 | 5969.34 | 98.72 | 1.7% |
| VIX | 16.14 | 15.24 | -0.90 | |
Taking my bitcoins and moving to Sardinia
November 21, 2024
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–Note: Due to a glitch in the matrix, this note may come out sporadically, if at all, going forward.
–Yields rose yesterday with tens +2.9 bps to 4.404%. On the SOFR strip, SFRZ5 was the weakest at -5.0 to a price of 9610.5 or 3.895%. Five yr yield was +3.2% 4.273%. SFRH5 settled -2 at 9575.5 or 4.245%, just under the 5y yield. In fact, every SOFR contract from H5 forward is at a yield below the 5y, so there’s small positive carry going into next year. Peak SOFR contract is currently U7 at 9621. The forward three years starting Z5 average around a price of 9615 or 3.85%. It’s the long bond that you’ve got to worry about….currently 4.59%; 5/30 is 32 bps
–Major factor yesterday was a report that Ukraine was firing UK-made missiles (parts made in China) into Russia. Equities sold off but then rebounded going into day’s end. Once again there was a buyer of SFRZ4 9600c for 0.5. Besides that, there wasn’t much in the way of disaster buying. DXY remains BID near 107. Bitcoin is the star of the show, now nearing 98k. NVDA results were seen as slightly disappointing with the stock down ~ 3% pre-market.
–News today includes Philly Fed expected 8.0 from 10.3. Jobless claims 220k. Existing home sales.
–Debating the move to Sardinia. (A town there is making a pitch to dissatisfied Americans). The problem of course, is that it might be lousy with Democrats. On the one hand, Ellen DeGeneres is moving to London…dodged a bullet there. On the other hand, Eva Longoria is spending time in Spain…maybe Sardinia is an attractive home base.
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20y auction and NVDA post-close
November 20, 2024
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–Early action was dominated by news of Putin updating Russia’s nuclear doctrine. Stocks lower, fixed income bid. Those moves sputtered; stocks ended positive and near SOFR contacts were slightly lower on the day while yields from 5 yrs out were lower by 3 to 4 bps. SFRZ5 to SFRZ8 were +2.5 to +3.5 with Z5 9615.5 and Z8 9619.0, nearly the same price at a yield around 3.85%. Ten year yield down 3.3 to 4.375%. There were a few ‘disaster’ buys: +15k SFRZ4 9600c for 0.5. +15k SFRH5 9750/9800cs for 0.5 (SFRH5 settled 9577.5). And a few much more reasonable buys for continued Fed eases, for example, SFRZ4 9562.5/9568.75 bought for 1.0.
–Seller of 30k SFRM5/Z5 spreads. Settled -18.5 (9597/9615.5) down 3.5 on the day. Open interest up in both contracts, +37k and +5k. The six-month spread in front, H5 to U5 settled -31.5 (9577.5/9609) so curve roll obviously favors this trade. Not to mention the fact that as recently as early October the near 3-month spread was -50.
–Sigh of relief as SMCI was +31% at 28.27. Of course, in July it was 90. NVDA reports after the close. 20y auction today.
Doomsday clock is ticking
November 19, 2024
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–Stocks appear to be starting the session on their back foot (ESZ4 -30). Something about Putin updating Russia’s nuclear doctrine as Biden gave a green light for Ukraine to use western weapons on internal Russian targets. Sounds ominous, but prolly good for bitcoin…right? That’s where we are now…
–Lina Khan closing out her term by pressuring Google to divest Chrome. Nope, we’ll keep chrome but we’ll tearfully part with Nest (to anyone who will take it).
–Housing starts today expected 1.33m. Rate futures quiet yesterday with red, green and blue SOFR contracts +1.5 to 2.0. 10y yield down 1.6 to 4.408%. Treasury vol slightly lower going into Friday’s expiration. TYZ4 109.5^ settled 0’34.
Data’s not this week’s catalyst. It’s Geopolitics
November 18, 2024
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–Friday featured a slightly flatter curve in the wake of Powell’s comments Thursday. SFRZ4 -4 at 9554.5, Z5 -1.0 at 9611.5 and Z6 unch’d at 9617.0. 10y yield up 1.4 bps to 4.424%. Odds of an ease at the Dec 18 FOMC are still favored, but being squeezed slightly lower. FFZ4 settled 9548.5, down 2.0. No ease means a final settle at 9542 (EFFR = 4.58) while a 25 bp cut is ~9552.5. So every bp is about 10% of probability. On Friday even Goolsbee, one of the most dovish Fed Presidents, said the dispute on the value of the neutral rate could mean slower rate cuts. The market had already shifted in that direction, but it’s still important to note.
–SPX on Friday touched the halfway mark of the pre to post-election surge. Now it’s all about picking winners and losers of the new policies. Drug companies shed pounds instantly at the announcement of RFK for HHS Sec’y. Banks are bid.
–Biden authorized strikes on Russian targets; dangerous escalation. Putin dangled the carrot of cheap energy to Germany’s Scholz: de-escalation.
–Dept of Defense failed its seventh consecutive audit, but hopes to be able to pass by 2028. There’s a DOGE target.
–It’s a slow week for US economic data. 20y auction on Wednesday. TYZ4 109.5^ expires Friday, settled 0’44 ref 109-17. This morning TYZ4 prints 109-11, continuing the downward trend. Friday’s low is 108-30. TYZ4 109p have 80k in OI (0’09s), 108.5p have 71k (0’03s). TYZ 110c settled 0’10 with 35k open.
Poco a poco? Not any more
November 17, 2024 – weekly comment
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This note is not about the market, but about the realignment of incentives.
I think this clip of Nayib Bukele, President of El Salvador, crystallizes the inflection point where we now find ourselves.
https://x.com/nayibbukele/status/1846375736308887723
In summary Bukele’s advisors said:
“You know that you can’t eliminate crime all at once, right?” Bukele asked, “Why?” Because the money the criminals make is recycled into the legitimate economy. “All of that economic activity will fall all at once, without a legal, parallel economic structure to replace it at the same speed. He [the advisor] said “you need to stop crime little by little (poco a poco) so that poco a poco you can offset that criminal economy.”
Bukele: ‘These are the kinds of theories that sound good to intellectuals but don’t apply in reality. The reality is that crime is crime. Punto. (Period).’
Bukele goes on to talk about incentives for the youth. “We’ll never be able to win the war of incentives. We found out the only way was to go after the gangs and arrest them. Not to punish them, but to remove them from society. They have to be out of the equation.” “So this young man [in his example] now thinks about his new incentives and says: ‘What should I do? Be a gang member and end up in prison, or should I get to work and earn money that now nobody [the gangs] will take from me?’ The point is that the incentive structure becomes right for society.”
“We understand we’ll pay an economic price for eliminating crime. …The alternative is to do nothing. …Our calculations – not from our financial cabinet, but from within our security cabinet – were that we would have a cost of 10% of our GDP. GDP would fall by 10% to eliminate crime. But our GDP didn’t fall by 10% it GREW by 3.5%.”
A good plan violently executed now is better than a perfect plan executed next week.
General George Patton
Here’s a typical response from the “intellectuals”:
I’m not personally on board with the idea of mass deportations. But it’s NOT because I am afraid it could be slightly inflationary. I think Summers’ argument is pretty stupid. The point is that INCENTIVES are changing, not only with respect to illegal immigration, but across the spectrum. Slow and sensible are out. There will be wrenching changes.
Consider this X post from DOGE:
https://x.com/DOGE/status/1857076831104434289
Notice what they did NOT say: “Go to this site and fill out an application. We’ll review your education credentials, mindful of our diversity goals, etc.” What they want: RESULTS. High IQ hard workers who share a vision. I doubt they care about anything else.
It’s like one of my favorite scenes in Ghostbusters, where Dr Ray Stantz (Dan Akroyd) tells Venkman (Bill Murray). “Personally I like the university, they gave us money and facilities. We didn’t have to produce anything. You’ve never been out of college. You don’t know what it’s like out there! I’ve worked in the private sector. They expect results.”
https://www.youtube.com/watch?v=RjzC1Dgh17A
I’m not saying it’s good. I’m not saying it’s bad. But there is a new reality to adjust to.
Bukele, Millei, Musk, Trump. Disruptors. The old order is obsolete. There are many legacy columnists and authorities demeaning Trump’s choices for important posts. I googled “editorials condemning Trump’s choices for policy roles”. Starts with NY Times (of course) ‘Reckless Choices for National Leadership’. They’re all there. Wash Post, LA Times, Vox, etc. Michael Bloomberg warning on RFK. Shrill admonitions on Gabbard. The key word is ‘legacy’. You lost. Your authoritative proclamations will now just bounce around sidelined echo chambers like the 4B movement.
The change in incentives already has created initial winners and losers in markets. Gone is the ‘participation trophy’. Passive investing might fall by the wayside. Banks soared. Big pharma was crushed. Bitcoin’s a winner. Gold’s a loser (for now). A friend had mentioned that the Defense Dept was already shifting funding and emphasis to smaller, more nimble companies working on drones, cybersecurity, etc. That dynamic will surely accelerate. In terms of rates, a new burst of entrepreneurial energy argues for higher base rates (in my opinion). In the short term, perhaps there will be economic pain as government transfers to households and the private sector are cut. The bar for Druckenmiller’s ‘hurdle for capitalism’ will probably be set to a higher standard. That means higher rates / higher neutral.
OTHER THOUGHTS / TRADES
Government hiring and spending has been an undeniable prop for stocks since covid. The broad equity market has also been supported by the idea of less restrictive forward rates. Both of those tailwinds are in jeopardy. Last week Powell indicated the Fed could take more of a wait-and-see posture given the resilience of the economy and balance in the labor market.
The green sofr pack, 3rd year forward, ended Friday at 9617.25, nearing 4%. It’s down 99 bps since Sept 10, just prior to the FOMC. Chart below.
The election surge in SPX retraced by exactly half (Nov 4 low 5696 to Nov 11 high 6017, halfway is 5857; Friday’s close 5870). It wouldn’t be surprising if stocks correct lower due to perceptions of renewed restriction by the Fed, and the realization that reduced gov’t spending will negatively impact GDP. Such a move might provide temporary support for fixed income, but the trends of a more normal positively sloped curve and funding rates that stay high relative to the past decade are likely to persist.
| 11/8/2024 | 11/15/2024 | chg | ||
| UST 2Y | 425.0 | 429.5 | 4.5 | |
| UST 5Y | 419.0 | 429.4 | 10.4 | |
| UST 10Y | 430.4 | 442.4 | 12.0 | |
| UST 30Y | 447.6 | 459.7 | 12.1 | |
| GERM 2Y | 218.5 | 212.2 | -6.3 | |
| GERM 10Y | 236.7 | 235.6 | -1.1 | |
| JPN 20Y | 183.1 | 188.4 | 5.3 | |
| CHINA 10Y | 210.7 | 207.3 | -3.4 | |
| SOFR Z4/Z5 | -60.5 | -57.0 | 3.5 | |
| SOFR Z5/Z6 | -7.5 | -5.5 | 2.0 | |
| SOFR Z6/Z7 | -2.0 | -1.5 | 0.5 | |
| EUR | 107.20 | 105.36 | -1.84 | |
| CRUDE (CLF5) | 70.11 | 66.92 | -3.19 | |
| SPX | 5995.54 | 5870.62 | -124.92 | -2.1% |
| VIX | 14.94 | 16.14 | 1.20 | |
In: Eurodollar Options
Fed has the ability to approach policy carefully. Uh-oh
November 15, 2024
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–Knee-jerk selling of rate futures on higher than expected PPI, 0.2 with Core 0.3 m/m. Then prices reversed. TYZ4 109-04+ on the number, then back up to 109-24+ pre-Powell, then to 109-08 post-Powell.
–SFRZ5 9600p seller of 40k at 37.0 covered 9614.5, 42d. SFRZ5 9612.5^ settled 90 on Wednesday and immediately traded 88.5 after put sale, where it settled. 9600p settled 38.25 v 9612.5. As attached vol chart attached indicates, this sale is near the lower end of the vol range, but is near 20-day historical. I think this is a program sale, as it seems to happen every couple of quarters (large put sales on first red, just out of the money). For the sake of comparison (roll) SFRU5 9600p settled 32.5 against 9608.
–Event of the day was Powell. He indicated the Fed is in no hurry to cut rates. Still wants to recalibrate but says with the economy strong the Fed has the luxury to see how things develop. Said that fiscal policy takes a fairly long time to work its way through the system… but in my opinion, the change in incentives is unquantifiable, and can happen very quickly. DXY ended near 107, a new high for the year, after being as low as 100.38 (low of the year) on Sept 27. Hard whiplash in the dollar over past six weeks. Heavy corporate bond issuance adding marginal pressure on rates.
–Powell spoke right at futures settlement time. This morning back SOFR contract from Dec’26 out are down 1.5 to 0.5, but near contracts (and stocks) are still absorbing the idea that the Fed could be on hold. SFRZ4 settled 9558.5, but trades as low as 9553.5, -5 from settle of 58.5 . EFFR is 4.58 (Price 9542). SOFR is 4.60ish (9540 and daily compounding adds a bp or so). SFRZ4 not quite ready to give up on a “recalibrating” ease on Dec 18, but it’s getting harder to make that argument.
–BOJ’s Ueda speaks Monday. I attached 20y JGB chart from yesterday. Longer maturities in Japan pushing for new yield highs (10y JGB around 1.07, 20y 1.89 with high 1.95 in July, just prior to the yen-carry volatility).
This chart is SFRZ5 implied vol with 20 and 60 day historical
Wide range of outcomes
November 14, 2024
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–PPI today but the only thing that matters is Powell, on the Economic Outlook, at 3:00.
–Big steepening rebound yesterday. 2y yield was DOWN 6.1 bps to 4.379% while 30s were UP 6.1 to 4.636%. As can be seen on attached chart, that’s a new high bond yield. 5/30 had made a new recent low Tues at 26 bps, but snapped back yesterday to 33.7 (5y yield -1.5 to 4.299%). Strongest SOFR on the board was M5, + 10.5 to 9601.5. By contrast M6 +3.0 to 9616.5, M7 -0.5 to 9616.0. Nov SOFR midcurves expire tomorrow, ATM settles: 0QX4 9612.5 = 8.0, 2QX4 9612.5 = 8.0, 3QX4 9612.5= 7.5. These are all down from about 13 the day before. Dec treasury options crushed. TYZ4 109.5^ settled 62 on Tuesday ref 109-135, and 49 yesterday with unch’d futures (Dec opts expire 22-Nov).
–New high DXY yesterday over 106.50, and this morning it’s around 107.0. (Level of USD is one factor in financial conditions; bonds and USD are tightening). Rishi notes the 30y yield is above SOFR (4.60) and EFFR (4.58) for the first time in years. Forward SOFR contracts are locked up ~ 3.85% – all contracts from SFRZ5 to SFRZ8 are between 9612.5 and 9616.5. Throw a blue dart for one to buy and a red dart for one to sell. From many standpoints, it seems to me that the market perceives an easy glide into inauguration. Or maybe paralysis. I don’t think so.
–Reasons for front end strength and related steepener are mostly pinned to CPI which came out as expected, yoy 2.6%. Lame excuse. I saw a snippet saying Citi still going for 50 in December. I feel as if something from Powell’s comments today might have leaked, but that’s just wild speculation.
–With respect to odds of ease in Dec: FFZ4 settled 9551.5. FOMC is Dec 18. EFFR is 4.58. On an ease, contract should settle a shade below 9552.5. On no ease, 9542.0. So every bp is ~10% in terms of odds. Pay 1 (sell 51.5’s) to make 9.5? Pretty cheap put…but what if Citi’s right? Or pay 2.25 for SFRZ4 9556.25/9543.75 to make 9.75. Of course, SFRZ4 options expire pre-FOMC on 12/13. But there’s a limit on the risk.
–I feel like there’s a lot “wrong” with current pricing. Stocks too high given valuations and high forward yields. Long end treasury yields still too low. Vol should perhaps be higher both MOVE and VIX. Curve should be steeper. Of course, I can make good arguments why all the former conditions are “right”. Stocks expect high forward growth; inflation is quiescent and bonds will be supported by positive carry. Initial moves by Trump to slash gov’t will cause a bit of economic pain in the near term, but will be positive in the future, and will help keep inflation down.
If the Gov’t Efficiency Team is cutting, does Powell ease?
November 13, 2024
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–CPI today expected 0.2 with Core 0.3 (same as last month) and yoy 2.6 from 2.4 with Core 3.3 from 3.3.
–Trump places Musk and Ramaswamy to tighten up gov’t efficiency. When an individual company announces layoffs, the stock often rallies. But culling government bureaucracy may not have the same effect on equities as a whole. There are a lot of companies depending on government largesse. Great in the long run though.
–Yields up across the board yesterday. New lows for many contracts. A few large trades I’ll cite. For a more thorough list see Art Main’s (TJM) summary below.
0QM 9537.5/9512.5ps 4 paid 25k (settled 4.0 vs SFRM6 9613.5). New
0QM4 9550/9500ps 8.25 paid for 34k (settled 8.25). New
SFRM6 made a new low for the move at 9610.5, but on Oct 1 it was 9713.5…100 higher. Seems a bit late to be selling into it here. On the other hand SFRZ5 fell from 9680 to 9557 in the four month period from start of January to end of April.
–SFRZ4 buyer of 35k 9556.25/9562.5cs for 3.25 covered 9556.5, 13d. Looks to be roll with 9556c OI +40k and 9562c down 40k. There was an outright seller of 50k SFRZ4 9556.5 which sparked a move to the day’s low of 53.5. Last time I saw a block that big was on 9/25 when 82k SFRZ4 were sold on block at 9606 (the top). Also buyer of 20k SFRX4 9556.25/9550ps for 1.75, 20k. New EFFR is indeed 4.58 or 9542 (officially posted for Friday).
–Activity favored put sellers in TY… vol just a bit easier on the move to higher yields. Suggests that there’s little panic left in terms of grabbing long maturity puts. TYZ4 108.5p 30k sold 6 to 5 (109-23+) settled 8 vs 109-135 (exit). TYF5 107p 20k sold at 12, settled 14 vs 109-18 (appears new).
–In combination with weakness in SOFR contracts (& straddles bid)…it argues for flatter curve and indeed 5/30 made new low at 26 bps. 5y yield +12.4 to 4.314 and 30y +9.9 bps to 4.575.
–EUR touched low of the year just under 106…last time there was April, and interceding high in Aug/Sept was just over 112. $/yen modest new high just under 155. DXY 105.90, with a high 106.18. High of year in April 106.51.
–Given the change in forward rates in Euribor (none) and SOFR (Z5 rate up >110 bps) it’s no wonder EURUSD has sold off.
Player summary from Art Main.
+32k SFRZ4 95.5625/95.625 call spread covered 95.565/.59 delta .16/.05 at 3.25
+26.75k SFRF5 96.50 call at 1
+13.9k SFRF5 96.875 call at 0.5
+10k SFRM5 98.00 call covered 95.88/.955 delta .05 from 1.5 to 2
+7k SFRM5 96.375/96.625/96.75/97.00 call condor at 2
+7.2k SFRU5 98.25 call covered 95.965 delta .03 at 2.5
+12k 0QF5 96.25/96.50/96.25 call fly from 5 to 5.25
+10k SFRX4 95.50 put at 0.75
+7k SFRZ4 95.625/95.5625/95.50 put fly at 0.5
+10k SFRZ4 95.625/95.50/95.4375/95.375 put condor at 4.5
+10k SFRH5 95.75/95.265 put 1 x 2 at 1 (bot one leg)
+15k SFRZ5 96.25 put (5k covered 96.065 delta .56) from 55 to 55.5
+34k 0QM5 95.50/95.00 put spread at 8.25
+25k 0QM5 95.375/95.125 put spread at 4
somewhat interesting note from a BBG chat (anon) / China stimmy less than expected accelerated the sell off according to friend WS at MNI.
Luxury company meltdown in europe continues:
MC FP is LVMH
873 in March, now new low 582
KER FR is Kerig
426 in March now new low 212
RMS FR is Hermes
2414 in March, now 2016 (not new low)
CFR SW is Richemont
150 in June, now 118 (not new low)
Bitcoin up/ Gold down / School’s out
November 12, 2024
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–Light volume as treasuries were closed. Flattening bias with SOFR reds down 7.5 but greens -7.125 and blues -6.25.
–Bitcoin explosion with Dec futures up over 10k late to 88300. Precious metals went the other way as DXY continues to rally. DXY now near 106. Dec Gold down nearly $15 this morning at 2603/oz. DXY 105.87.
–Buyer of about 30k SFRH5 9600/9625/9637.5 broken call fly for 3.5 to 3.75, even as odds for more Fed easing are squeezed out (SFRH5 settle 9578). FFG5 which captures both Dec and Jan FOMC meetings settled 9566.5, down 2. That ‘s a rate of 4.335; new EFFR is 4.58 so looking for just one more ease over two meetings. Actually. a bit more priced for the Dec 18 meeting than Jan 29; FFF5/FFG5 settled -7.5 (9559/9566.5).
–NFIB and SLOOS today. NFIB just out at 93.7, but these are pre-election surveys. There are several Fed speakers, most important is Waller at 10, but he’s talking about payments.
–Trump to dismantle the national Education department. He says results can’t get much worse and is probably right.
