Throwing money
October 16, 2020
–Yields rose slightly as stocks fought back from initial weakness. ESZ put in a low of 3431.50 before rallying back 44 to 3475.50, down only 5.50. Yields edged slightly higher with tens +0.8 to 73.4. Philly Fed surged to 32.3 vs an expected 14.8. This is above all 2019 levels and all of 2018 (high of 32.2 in 2018). The grain complex looks strong with Dec Corn 403 ¾, at the year’s high. Dec Wheat easily made a new yearly high at 619 ¼ while beans are lagging a bit. Also poised to make a new high, Dec Copper at 308.75. Somewhat interesting that real THINGS are making new highs here. (BBG Commodity Index chart attached). Of course, bitcoin also looks poised to test the early high at 12473 set in August. Late yesterday was 11540. Of course, maybe it’s all summarized by a Reuters headline: “Investors throw money at everything, dump cash – BofA”.
–I saw a fascinating Nova episode last night dealing with the “landscape of fear”, that animals in the wild without predators tend to change their behavior and venture into open plains when lions/ hyenas have been absent for a while. Not only are the investment predators gone, the Fed is throwing bushels of feed into the open fields, as SF Fed’s Daly intimated yesterday.
–Today’s news includes Retail Sales expected +0.8 with Industrial Production +0.5 and U Mich long term inflation expectations.
–Downside plays continue in Blue Mids. 3EH 9937/9912p 1×2 2.0 paid 2500
3EH 9937/9900ps 6.75 for 4k, settled 6.75 vs 9950.0. Blue March has the most open interest of any month in midcurve puts at 588k except for 2EZ (green dec) at 740k.
