Rebalance
January 3, 2024
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–Yields rose on the first trading day of the year, with tens up 6.3 bps to 3.943%. On the SOFR strip, the red pack led the way, settling -11.625 at 96.685, a yield of 3.315%. Stocks were hit as AAPL tumbled 3.7% (a friend noted rebalancing as AAPL had become an outsized proportion of portfolios; Barclay’s downgraded AAPL). SPX -0.57%, Russell -0.72% and Nasdaq Comp -1.6%.
–Large put condor buy as a lean against ease pricing: +40k SFRJ4 9537.5/9525.0/9500/9462.5 broken p condor for 2.25. Settled 1.75 ref 9542.0 in SFRM4. The put tree (9537.5/9525/9500) settled 0.25, but the lower strike bought for protection “just in case” the Fed’s not done.
–Today’s news includes ISM Mfg, expected 47.1 from 46.7. JOLTS exp 8.85m vs 8.75m last. Fed minutes this afternoon. No “push-back on market pricing” discussion?
–From Reuters this morning:
Jan 3 (Reuters) – Some of China’s top banks have sharpened scrutiny of smaller peers’ asset quality and have tightened standards for interbank lending, three sources said, in an effort to curb credit risk as a deepening property debt crisis ripples through the economy.
I’m sure that China’s property woes dwarf those of the US, but CRE problems continue to lurk on regional bank balance sheets. On the other hand, US Gov’t Debt just exceeded $34 trillion. Like everything else, the tacit decision is to surreptitiously transfer problems to the US gov’t balance sheet; then just spend out of it. Eventually it’s a binary outcome, massive depression or inflation.
From friends at RJO London regarding SPX end-of-2024 targets (thanks NL and QB )
FWIW, last year’s average guesstimate was 4000 (ended 4770)!
Oppenheimer 5200
Goldman 5100
Deutsche Bank 5100
Citi 5100
BMO 5100
RBC 5000
BofA 5000
UBS 4850
Barclays 4800
Evercore 4750
SocGen 4750
Wells Fargo 4625
M Stanley 4500
Cantor 4400
JPMorgan 4200
