CrazyRichAggie said:

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Thanks. It's much needed. I try to surround myself with older mentors. It is har. My wife had mentioned the other day that our kids out the first generation that can just sit and watch tv all day. With Netflix, Disney plus, etc, they can literally just sit and watch episode after episode. You have to battle with that, $RBLX, Nintendo switch etc. The hardest part for us is our kids have friends in the neighborhood and their parents are way more relaxed on screen time than we are.

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Best way to limit the screen time is to get them involved in as many things as possible. Best thing is sports to get them out of the house. It'll kill you and your wife and your free time (saw above you have 5 kids...wow, I only have 3 and it was rough at times.... but worth it). But sign them all up for sports and get them involved, my kids are between 14 and 20 now and I can tell you that the best family friends we have are from kid related sports. It is a good busy and I cherish every minute of it and definitely miss it as my oldest went off to college.

Futures down 7, up 100 by morning no doubt. Maybe the Brits hit the sell button because they're mad at the euro final.

Good Mornun!

I love Monday's when we get to get back into the saddle.

The morning snapshot...



VIX shot up a bit from 16.20 to 17.52 briefly and now just under 17. Keep an eye on VIX today.

Short week for me so any weekly trades I am in or post most likely I will exit Wednesday or Thursday morning by 10AM EST.

Family trip through Kentucky and trading and driving might be frowned upon. Although I did spend time in the IBKR app just in case.

So calling all degenerate traders....let's get with it!



Trade wisely!

$SPCE up pre-market 8% ($53.15).

Monday Macros

Treasuries made a mild run this morning at about 3 am and got to 1.33, but we do not think we will see the liquidity squeeze this week that we did last week as the 18 day window of no treasury supply ends today with 96 billion of treasuries to be priced at 11.30 for 3 years and 1 pm for 10 years... Tomorrow we have 24 billion of long bonds... We said numerous times last week that the technical's of treasuries were leading interest rates lower as we had a 19 basis swoon from 1.44 to 1.25 and back to 1.36... The way it traded was technical... But we do recognize that the US economy is slowing some, maybe it has peaked, but we doubt it... We also recognize that Covid is a global problem and we read in the WSJ over the weekend that the Chinese vaccine was less than 50% effective against the variant... Add in all the people through the world' and in the southwest of the US , who are not vaccinated, and we can see the concerns... Even China is seeing slowdowns, we saw their car sales numbers were off 5.1% and they lowered bank reserves last week to try and stimulate economic growth... The ECB also talked dovish over the weekend, trying to extend their view of monetary policy with the hope of fiscal policy... Add in the questionable probability of an infrastructure deal of significance, and we can see where treasuries and equities could react more...

Range for 10 years for this week should be the 200 day moving average of 1.239 to the upside and 1.42 , 1.47, 1.52 and 1.59 on the downside... 5 years still in a .70 to .90 range... For this week the key points will be today's auction, which we think will be fine.. Tomorrow's bond... Powell's testimony Wednesday and Thursday in front of Congress for the Humphrey Hawkins requirement...Powell has been the most dovish of Fed Governors, and being the Chair gives him more leeway... But the Doves believe the economy is slowing down, we agree except we think it is supply chain related (look at car sales and availability of cars), and will be more transitory... They also believe that inflation has peaked. We will get CPI and PPI Tuesday and Wednesday and could see a disappointment...we see that the expectations have been lowered one tenth each from last week, to 4.9% CPI and 6.7% PPI respectively, which are chunky numbers still... Here again we will hear the transitory talk... Some are trying to use the word "stagflation", which could not be more out of place for now as the US Economy grows rapidly

Infrastructure... What is the expectation?... Few expect that Biden will get the 4 trillion some hope for... Or the 6 trillion that Bernie Sanders wants... Some progressives want 10 trillion... On the other side, some think that given DC's conflicting priorities that there is a 20% chance that no infrastructure gets passed... Our view is that Manchin's 3 trillion (up from 2 trillion recently) is closer to what we see the actual number will be... But if do not get their act together by July 31, they may lose the reconciliation window, which is a horrible way to do business anyway... But this would give the economic slowdown crowd fodder to push the weaker economy outlook for second half of 2022

Corporate bonds and HY... Bonds continue to come easily with strong bidding... Our expectation for IG issuance is 40 billion this week... Treasury issuance begets demand, and corporations will take advantage of that... While US HY is expensive and at or below inflation currently, Chinese HY has been getting slammed big time... There really is a crisis of confidence in the Chinese HY market, where spreads of Single B's , have fallen by 7 POINTS in the last month or so... 3 year paper is yielding over 18%, which is higher than the peak of Covid last year. The Krane China Corporate HY Bond USD index is down more than 1.5% over the past two weeks, which Barron's calls a Plunge... They comment that "outside of Asia, credit markets are priced for perfection, in China, they are price for a meltdown".. Given where US HY are currently and CCC, 3.66 and 5.46%, respectively, one has to watch this space and beware what could happen...

Anecdotally our view of current economic outlook is influenced by our surroundings... For the next 2 months or so we are living in one of the two most vaccinated states in the country... Hotels are full and restaurants are busy... We had lunch on Saturday with a gentlemen who is part owner of a popular, trendy, diner in Portland Maine, that is called "Becky's"... Celebrities go there and it is always busy, we may try to go there tonight... He told us that in the 30 years that this diner has been open, last week was the busiest ever... Again this influences our view, and while we can not see whether the likes of Branson, Missouri (hot spot of Covid so we are told) is busy or not, our view is that the US economy will remain good, that economic numbers have not peaked... Infrastructure will get passed at some point, and inflation is real and not going away...

Conclusion... It will be a choppy, but we think range bound week... Liquidity will be better, and inflation numbers could disappoint... Retail sales will be weak due to supply chain issues, but earnings numbers should be good... Powell will lean on the dove side, but his mantra for lower unemployment, while noble, is not going to be achieved by lower rates... If the studies in the WSJ are right, many of the people out of work want to work remote and live in the country, while the jobs are hands on in the cities... Lower rates is too blunt an instrument to fix what ails the job market... Inflation in real estate and rents is real and not transitory... And mortgage buying is just making the housing market simmer more... While the cynical nature tells us the Fed is trying to keep real inflation high to pay the long term deficit in lower dollar terms, that is not what they are trying to do... But given the huge amount of money the Fed puts into the economy, the more asset prices will soar... So taper now, at least for mortgages... And if the infrastructure stalls, keep rates low... That is the Fed put that is under the equity markets....but bubbles are brewing, but not this week..

Been mostly offline this weekend because I was really sick but feeling better now.

Looks like the public digested that article regarding Biogen and realized it's not a negative for SAVA. they're Update is 2 weeks from today. I anticipate it increasing going into that date. I think SAVA will have strength relative to the market, even if the macros sell off.

Prognightmare said:

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FJ43 said:

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Glad you're feeling better Prog. Never fun to be down.

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Thanks bud

I had severe acid reflux, felt like I was throwing up battery acid and I had a fever for a day. I'm not 100% but I'm much better and the fever broke.

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Getting old's a *****

Two stocks for ya on a Monday -- FLGT and MELI

FJ43 said:

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CLOV - Downgraded To Underweight From Neutral at JP Morgan, PT $9

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Hmm I wonder who has been selling calls to WSB and retail....

I don't know when, not today, maybe not even next month, buying the dip won't work. Pullbacks are getting more shallow.

FJ43 said:

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Watch OKTA. Out of the normal box one.

One of my feeds posts.

Over 253.64 - 7/16 255C

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Cyber security. They have a a great product for identity and access management. World wide leader.