Mornun!

US slightly red
Eu slightly red
Asia mostly green

Quick snapshot of our side of the pond....



For me today..... mostly tactical SPY and Qs with possible relative strength equities scalps.

More premium crush with Opex week so playing light.

Quick link for y'all to check which sectors are moving.....or not.

https://www.sectorspdr.com/sectorspdr/

But.... for the most part..... going to pull up a chair and watch the show between the bulls and the bears.



Trade wisely!

Was thinking more about WWR this morning. Thinking on paper here for more input
Run up before earnings
ER was a nothing burger in the immediate so sell off since then
However, the earnings did give us a nugget of info. That 30 customers have their finished product and are evaluating which should be completed in September.
My thoughts are what does that news do? Say they get thumbs up from several customers, is that preliminary deals getting done? Commitments of some kind? And also curious if the market reacts to a report of customers are done evaluating and we're proceeding or does it only react when signs of deals getting done start to show. Or does it only react to actual production milestones
Just some pre coffee ramblings

I think you'd see some reaction to signing of deals as that happens, but I don't think those are big moves unless it's enough to demonstrate a significant fundamentals change for the comapny. My thoughts right now is that for the stock price to go up there are going to have to be another group of investors interested in the stock. Until then we'll continue to see it drag as retail guys slowly lose patience and sell. In order for big investors or funds to dip in, they have to start showing big progress or talking concrete revenue projections.

Tomas Hermensa said:

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I think you'd see some reaction to signing of deals as that happens, but I don't think those are big moves unless it's enough to demonstrate a significant fundamentals change for the comapny. My thoughts right now is that for the stock price to go up there are going to have to be another group of investors interested in the stock. Until then we'll continue to see it drag as retail guys slowly lose patience and sell. In order for big investors or funds to dip in, they have to start showing big progress or talking concrete revenue projections.

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Sounds like we need to get our Texags marketing team together and go find new customers.

Wednesday Macros

Choppy Overnight Trading...But Range Bound... Two Fed Speakers..Minutes

The overnight markets started out with a mild risk on tone for Asian equities, that sent 10 year treasuries to 1.278 at 1.15 am.. Then some risk off selling led the 10 year to its low yield of the overnight session of 1.255 at 4 am... Now we are back near the high yields of the overnight session... This is a long way of saying liquidity stinks and no one knows the next big move.

Today will be led by the Fed speak... Both new Fed speak from Bullard and possibly Kaplan... We already had Rosengren in an FT interview... And of course the FOMC minutes at 2 PM... We think the Fed is closer to tapering than the markets anticipate . But as long as the Covid Delta variant remains in the headline, we do not think rates move too far... 10 year has resistance again at 1.22 and support at the 200 day moving average of 1.31...While many of our colleagues think the tapering is built in and well anticipated, we could not disagree more...

Kudos to our friends at the FT who had three good articles in the overnight press

1) Fed's Rosengren.."Massive bond purchases are ill-suited for US economy
2) Rennison..."Rating agencies caution on corporate debt after borrowing frenzy
3) China's Xi calls for wealth redistribution and clampdown on high incomes... Really that is what all the fuss is about?... No, it is about power...

New issue corporates are very quiet with less than 2 billion issued yesterday... The first two days of the week were just over 5 billion.. We doubt we reach the 15 billion expected for the week... Spreads are wider with CDX at 293... But still within the 280-300 range... While credit rating agencies are worried about the leverage health of corporations, we read a very different, positive, outlook on corporations from Citi last week... We are not worried about US corporations at this time... And according to the stats, neither are Asian accounts worried about US Corporate bonds as they are buying them faster than they can be printed.

Japan, Taiwan, and China all added record levels of Corporate bonds to their holdings in June, surpassing levels set during the start of the pandemic... Japan adding 17.1 billion, while Taiwan added 7.9 billion.

While Delta variant makes the first spot in the nightly news with a horrible outlook focusing on the worst of it... They fail to mention that a lot of the non vaxxers are waking up. The number of Americans getting a first vaccine shot rose to levels last seen in May.. And if you read the Target call discussing the results overnight, Brian Cornell, the CEO, said that the retailer is not seeing any change in consumer behavior amid rising Covid cases... He used the word resilient multiple times.

Equities... No idea whether this is the start of a correction... Equities rebounded from their lows in the last 2 hours... There is still lots of money on the sidelines... A 10%, or at least a 5% correction, is expected between now and the end of the quarter, but we just do not think this is the beginning... Investors continue to think that corporate spending and buybacks will support stocks. According to the WSJ, S+P 500 companies are projected to increase cash spending to 2.8 trillion in 2021 on capital expenditures, mergers and other types of investment.

20 year auction today... Right after Bullard, and before the FOMC minutes... BB says Kaplan is supposed to speak later today but the FOMC speech schedule has that on Friday...

Just need TSLA to come out and say they'll take all of it.

Folks, we are on Wednesday of OPEX and with that we are going to likely be in a balance area for days. The chop will be there and likely won't relieve itself until vol hedges unwind Friday.

Don't expect any trend days......it's just not really feasible here.

You're not likely to miss any giant movers over the next couple of days.....next week could be a different story though.

Stay light, stay nimble.

WWR bounced off the May $3.45 support like a boss.

Selling 8/27 SAVA $60Ps for 2.65.