Quadruple witching day - can get some funky vol during day
ECB hiked 50bps, stayed the course, confirmed/displayed strength/confidence in EZ banking system, data dependent (and they only should be..), get over the current bump in markets and continue course of hiking, however if problem persists we are on hold...
BofA, JPMorgan lead bank group to infuse First Republic with $30B in deposit >>> so depositors take money out of small banks to put into big banks, big banks puts money back into small banks..(big banks too big to fail..)...madness really - see Yellen interview below, market shuffling deposits to where liquidity is needed
Macron’s defiant show of force in parliament exposes a weakened president
FedEx jumped after hours, smashing earning forecasts
Deal! NHS unions strike pay pact with ministers after months of UK strikes, Teachers unions also having more serious talks with Govt
Volkswagen to invest in mines in bid to become global battery supplier
China's Xi to visit Russia next week
Markets :
FED action, let's be clear, technically this is not QE, FED is not buying assets per say, other banks are borrowing funds pledging collateral (same for CS and SNB..) >>> all of which gave some air yesterday to markets, NQ recovered, CS recovered although trading back below 2CHF again, JPY and CHF weakened etc, but all this should not stop FED from hiking 25bps next week (priced) or even 50bps
Equity markets, main indexes pretty dull, big rotations, recession calls vs utilities, and NQ rallies on lower rates. But let's sit back, I read headlines such as ''stocks rising in the midst of a banking crisis'.. in many ways it's about liquidity is the wrong places/issues, but beware, things can turn quickly
Crude jumps back a few pct in sympathy with the above
FX land, CROSSJPY's initially decently lower, EURJPY hit a 139.25 low yesterday, bouncing back to 142+ this morning, so decent moves in crosses, CHF a smidge weaker too. GBPCHF long-term?
BOND 'settling' a little, rates VOL lower, helping the whole risk complex settle too >>> bond, rates VOL THE key..
Again high vols create great opportunities to enter into 'desired' position, we have purchased a few stocks this week for our clients that came to our levels, for this though we need 'room' to step in, use those 'deleveraging dips from other participants' to enter into new positions
Senator from Oklahoma asks Yellen asks if deposits in his community banks are all insured - they are seeing outflows to big banks. Yellen basically says sorry - you ain't part of the club!
French Senate adopts contested pension reform, final vote set for lower house (france24.com) - Macron’s defiant show of force in parliament exposes a weakened president – POLITICO if you think UK parliament is fun watch this : French MPs sing Marseillaise and boo as PM forces through pension reform bill - YouTube
Seven ways in which Credit Suisse isn’t SVB | Financial Times (ft.com) agreed - however, the issue is its fundamental business, and how one can operate with so much debt!! (ever checked the annual report?..) >>> and those thinking UBS and CS should merge, have those people ever asked UBS management and major shareholders ? major restructuring is required, has been for 10years... get rid of IB business, reduce worldwide bizz to wealth management, focus on wealth management, reduce staff drastically in CH too, reduce amount of branches dramatically, sell some to cantonal banks and/or Raiffeisen group etc
when financing is plenty and funding is at zero it all made sense
GBPCHF - forget about the next 3-5pct - the point here is....for the right reasons (Brexit), GBP has been hammered. There are a few positives to look for long-term and CHF could lose its safe heaven statis (partly) due to CS ?.. 'swissmade' status could be weakened
have a wonderful Friday and week-end
Team PVM