Morning 3-17

A few Notes:
From the chief Investment officer at Alhambra “most assets are in a fire sale with no bids and zero Liquidity”
The key problem or the main problem facing the markets is the Squeeze in Dollar liquidity, all of the trillions spent on repo operations and yet still a squeeze. Until that is fixed “risk” will have a hard time sustain any rally.
From Forex live “The EUR/USD 3-month cross currency basis just blew up to its widest spread since 2011 – now at 110 bps – while the yen-dollar 3-month basis also widened from 80 bps to start the morning to nearly 120 bps currently.

And all of this is coming despite the fact that central banks are relaunching swap lines to try and ease funding pressures in the market.

Could this be the reason why we’re seeing stocks fall back today as investors are fearing a possible funding squeeze? In turn, this is also perhaps the reason why the dollar is outperforming so heavily this morning across the board too.

We underestimated how acute dollar funding pressures would become,” said George Saravelos, head of currency research at Deutsche Bank AG. “We worry that fixing this dollar shortage may be more difficult than policy makers think.” (BBG)

The % change in Dollar index since March 9th +5% it gone from a low of 94.65 to 99.43. today 3-month dollar libor registering its biggest jump since 2008! At least fro another year or Libor is one of the most Important short-term Interest rates. Oh, the Vix had it highest close ever


Fiscal Stimulus:
• Talk now that Mnuchin will ask Congress for $850 B in new Stimulus, no time to be tight with Purse strings.
• Tom Cotton came out last night for $1000 per adult or $4000 for a family of four monthly a la Andrew Yang. Romney and Gabbard also suggesting similarities. These are Republicans openly calling for helicopter money a Sign of how bad things are
• France announced at least 45b Euros in fiscal stimulus
• EU to relax certain state rules to mitigate impact of Virus on Blocs Economy. One step is to give tax breaks of at least 500,000 euros (BBG)
How will Europe pay for all this Sell more debt Bunds looking at 6th consecutive lower close, Italy’s BTps down for 4th consecutive day Yields +60 bps in 3 trading days and sovereign spreads blowing out vs Bunds.

Markets:
Spoos were at once Limit bid but Dollar rally short circuited that Spoos ,Nasdaq and Dow all up1% or more European Stocks have given up all of their gains Dax and Cac- .9% bund s-100 ticks U.S> bonds -2.5 handles 10s down 25 ticks. So 850B in new stimulus how is this going to be paid for?? Sell more U.S. debt thus one reason weaker


. @sentiment TRader: No solace. In many respects, there is no comparison to the unrelenting pressure investors have faced over the past week. On Monday, not a single security on the NYSE managed to tick to a 52-week high at any point during the session. That hasn’t happened since October 1990, when there were half as many securities on the exchange. At the same time, more than 65% of them ticked to a 52-week low. Breadthwise, this was the worst day in at least 55 years (Mizuho)


Saudi Arabia said they will export a record amount of oil ~10m barrels a day Calendar spreads are collapsing.

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