Tuesday Macros

Big Moves From 4 AM...Equities Were Higher and 10 years 1.63...Reversed

So what happened to take equities from the highs of the overnight session to a loss and take 10 years from 1.63 to 1.59 since 4 am?...Some real negative sentiment about where equities are going and whether the short base in treasuries has been reduced enough to allow the reflation trade to resume... Japanese equities had a tough overnight session as Tokyo and Osaka moved closer to declaring states of emergency amid rising Covid cases... We question how the Olympics can move forward in less than 2 months time..

Treasuries hit 1.63 10 years and 2.32 long bonds, the recent auction average, at 4am, as a very large steepener futures trade of 4000 10 year contracts hit the market... But since then equities started to crater and moved them back to the critical areas of 1.60 10 years and 2.29 long bonds, areas from which a rally could occur if these levels are sustained before the Fed meeting a week from tomorrow... As we write this moment they are both through those at 1.59 and 2.28, but they are choppy... Over 42 billion of bank paper has come in the last few days, led by JPM and GS Thursday, Bank America Friday, and Morgan Stanley yesterday... Citi and Wells are coming, so expect the supply to continue. From the latest Bank statistics, the Banks are arbitraging their issuance as loan flows are weak and bank deposits heavy...

Corporates, on top of the Bank paper mentioned above, had over 11 billion of IG in the first day of the week... This has been keeping treasuries under pressure as the reflation trade wants to start again, but for now the demand for credit continues to be very strong.

Equities... Besides weakness in Tokyo, Europe is now under pressure, down over 1%... Both Bank America and MS came out overnight bearish on US indices. BB had a story late yesterday pointing out that when the S+P trades 16% or more above their 200 day moving averages, an equity correction is not far away...They compared this to the 10% equity correction in the tech wreck of last September, We do not have a strong opinion here, but as we said yesterday, the smaller cap stocks have not been keeping up with the records of the recent indices,, in fact have been going the other way.

Longer outlook... We still think 2% 10 years is in the cards this quarter... And that the majority of shorts have covered... Away from treasuries we continue to focus on 10 year Bunds... With a new chancellor this fall, the political upheaval in Germany is coming...and as they finally get the vaccines, their economies are going to open quickly... 10 year Bunds have been trying to break the negative .19 to .23 range, currently, .249... But when they break that range the charts show -.04... That will coincide with a big push in the US towards 2% 10 years... But not before the Fed announcement next week.

We went to a quick local breakfast yesterday after our morning meeting... Small place down the street with 10 tables, where they currently only seat 4 tables... It was empty when we got there but quickly filled up... That is not the story. The story is they were closing at , two hours early.... Which is what they are doing because they can not get help to work there... And the people are overwhelmed... Really.. The start of the season and no help... While we are hearing these type of stories everywhere... Powell tells us that there are 10 million people, now 8.5 million, out of work... Where are these people and do they really want to work?...we think we know the answer or at least part of the answer, but jobs are out there .

The job story....it blows my mind.

We're Aggies, so this statement is wasted keystrokes here because our mindsets are similar.

I'd sweep the floor and plunge the toilet at random waffle houses before I sat latent unable to provide for my family. It's just how I'm wired.

McInnis 03 said:

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The job story....it blows my mind.

We're Aggies, so this statement is wasted keystrokes here because our mindsets are similar.

I'd sweep the floor and plunge the toilet at random waffle houses before I sat latent unable to provide for my family. It's just how I'm wired.

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We've returned to the same BS we had under Obama.

The unemployment benefits offices aren't doing anything to validate situation. If you go apply for it, you get it. Combine that with the covid relief stuff, and there's people that were minimum wage, slightly above, service type stuff, etc. that are pulling down 60-70K annualized for sitting on their couches.

Just another policy under this **** administration designed to eat away at the middle class in our country and create a permanent dependent class of voters.

The 8 day crossed over the 21 day on CLOV. $8.50 area would be big buying opportunity.

SKLZ larger block buys started yesterday and usually indicates a reversal opportunity. I sold naked Puts and bought $15 calls out to May 21

There was a guy on the local radio station here in Austin that owns a small business (can't recall what exactly). He put out a job description had lots of applications turned in. Set up interviews with 11 people and all 11 were no shows for the interview. People are just showing they are trying to find work so they can keep getting unemployment and stimulus checks once a quarter

oldarmy1 said:

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The 8 day crossed over the 21 day on CLOV. $8.50 area would be big buying opportunity.

SKLZ larger block buys started yesterday and usually indicates a reversal opportunity. I sold naked Puts and bought $15 calls out to May 21

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OA I miss you. My God how I miss you.

Come save us on Fubo and WWR!

ag94whoop said:

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oof
rough start for CLOV

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This is why we buy CC on a run up..