Morning 7-23

 It Continues:


This morning — Senate Majority Leader MITCH MCCONNELL plans to unveil his coronavirus relief bill, and the Senate GOP leadership anticipates it will have the White House’s support. REMEMBER: MCCONNELL views this bill as a GOP marker for negotiations. (Politico….)  Republican are not unified on anything right now  .

…further THERE’S REAL IMPACT if Democrats catch a whiff of any disagreement among Republicans. If the White House and Senate Republicans are not on the same page, it strengthens the Dems’ hands. And we have seen the administration roll Republicans a few times already. (politico)…. Passage of any Bill By next Friday is in serious doubt

… A pair of cafeterias regularly used by White House staff members were reportedly closed this week after an employee tested positive for COVID-19, the disease caused by the novel coronavirus. (The Hill)


  • Tesla higher a” Homerun quarter” per BBG Tsla reported 4th consecutive profitable quarter were china accounted for a sharply higher proportion of Its production and Sales…hmm Maybe USA should have tried harder to keep him here?
  • Twitter +4% as they reported record user growth, add revenue missed expectations
  • MSFT cloud computing business grew slower than expected stock 2%


 European Auto Sector upgraded by Citi thus pushing autos to hefty gains, as sector +2.8% Renault +7%, Daimler +5.5 also Solid earnings from Unilver providing a lift for European stocks .European Bourse trading slightly in the green. The red-hot White metals market taking a breather today Silver, Platinum, and palladium all down >1% Gold +.6% narrow range in Dollar index, Euro traded up to 1.1598 in the spot assuise a touch lower. 10-year BTP yields below 1% 202 lows are .9%   have not talked China Much but PBOC a bit aggressive in its Yuan Fix lower vs yesterdays fix  Aussie dollar  giving back  some of this weeks hefty gains


  • California: new cases +12112 to total of 421k, death toll +159 to total of 8050 (both record daily highs); California has overtaken New York as state with highest total virus cases
  • -Texas: +9789 new cases to total of 351618, death toll +197 (record daily high)

 Markets adrift so far this morning Weekly jobless claims were bad missed expectations the trend lower has stopped. Dollar rallying a bit on the bad news Higher dollar =Risk off, let us see what Silver and gold do here

Sovereign Spreads

Another benefit of the EU Stimulus deal is the continuing narrowing of sovereign spread to bund ,below are Spain , Italy and France charts

Germany-Spain yield spread weekly chart
Germany-Italy spread weekly chart
Germany-France not as severe as other two graphs but still good to keep an eye on
Weekly chart of the Average Govt. Bond yield of Germany been below Zero for over a year the new norm Negative yields and tight spreads buy Europe!!

Morning 7-22

  Major news overnight…..@StateDept: US orders the closure of China’s Consulate in Houston to “protect American intellectual property” & “private information.” US accuses Beijing of interfering in politics, stealing intellectual property, coercing biz leaders & threatening families of Chinese Americans…….A bit of Risk off when news hit wires  we know China will retaliate  per pro farmer  “The latest U.S. move marked “a political provocation unilaterally launched by the U.S.,” Chinese Foreign Ministry spokesman Wang Wenbin said today at a routine briefing in Beijing. “China urges the U.S. to immediately rescind its erroneous decision, otherwise China will undertake legitimate and necessary responses.”

The continuing story of the Weaker dollar is driving flows, DXY below 95 handle and has 94.65 the March lows on the radar. Real rates aa sub story to weaker dollar continue to drop thus putting a bid into hard asset. Silver ~+17.5% this week, Platinum ~10%, Gold up a modest 3.3%…Aussie Dollar +~3% from Mondays lows   one of the Commodity currency benefitting from Weaker dollar and run up in metals

Excitement surrounding the EU stimulus deal continues for a second day Euro testing 1.16 handle +1.6% from Mondays lows, European Stocks will tell us when the Euro is to high to impact Exports currently not a problem. Italian yields Continue to move lower and the spread to bunds tighter…..treasury yields lower to sideways  as they have been for a weeks Spoos 20 handles off lows, Nasdaq 100 handles, Russel trading a bit lower  had your chance to buy Spoos on dip overnight. Republicans struggling to speak with one voice regarding new stimulus deal early days but monitor situation

Early results from second-quarter earnings season have been coming in better than feared… Analysts’ consensus going in was for S&P 500 earnings per share to tumble by 44% from a year ago, on a 12% drop in revenues. The actual results so far, according to data from FactSet, show just over 80% of S&P 500 companies that have already reported second-quarter results have surpassed Wall Street’s estimates.-pro farmer

  • US Strikes $2 Billion Deal to Buy COVID-19 Vaccine from Pfizer
  • RTRS: China central bank to pause easing as economy recovers, wary of over-stimulus: sources
  • Trump, GOP Struggle to Find Unity on New Stimulus – BBG   watch this
  • U.S. records 1,000 deaths in one day from COVID-19, California passes 400,000 cases – Reuters
  • S&P Global: COVID recovery fund a ‘breakthrough’ for EU sovereign creditworthiness … RTRS European Union’s 750 billion euro (683.31 billion pounds) post-pandemic recovery fund is a positive for the bloc’s sovereign ratings
  • Trump says pandemic likely to worsen before improving… President Donald Trump said Tuesday the coronavirus pandemic would probably worsen before improving but said getting a vaccine is a “top priority” and “we’re going to get it taken care of.”
  • MSFT and TESLA earnings after close
  • Snap -7% due to poor earnings
  • API reported a build in oil stocks 7 million barrels

A few things

1 day % change SPX

What a day for the Aussie dollar +1.8% vs USD +1.3% vs JPY and +1.7% vs Yuan

Some lingering question regarding the bund and why it hasn’t sold off due to EU deal? Hmm well ECB still doing QE and whatever acronym program they are embarking on is still buying bunds. EU countries not out of the water with regards to recession and thus individual countries can still be downgraded.lastly Spread tightness might be representative of EU Success more so then outright move in Bunds. Just a few thoughts Once I read some more insight ,clarity will ensue.

  • Nasdaq down on day,but other major indices higher
  • Dollar index approaching March lows


Weaker Dollar along with real yields continuing to drop, 10 year real yields -.9% 5 year Real yields -1.15% both down over 3.5% on day and trending lower=increase demand for hard assets .

March lows on the Radar for DXY

many people talking about yesterdays random walk in markets a term that pops up more frequently to explain daily movements this summer. From Rosenberg research …”The S&P 500 rallied 0.8% and, yet, only 3 of the 8 sectors were in the green! The median sector was actually DOWN 1.0%. And financials lost 0.4%, as did the Russell 2000, and the cyclically-sensitive transports were crushed 1.6%. Not to mention the fact that 20 of the Dow stocks closed in the red; strip out Microsoft, and the index fell 50 points as opposed to rising 9 points; then also strip out Apple and the Dow lost more than 100 points. A run-up in the major averages devoid of any semblance of cyclicality. The yield on the 10-year T-note dipped 1 basis point,to 0.61%. The CRB metals index was flat

IFR Not an Equity story ..Yet US Govts Review

IFR Immediate Alert Global Squawk Box US GOVTS-Not an equity story (yet); more about real yields; dollar/gold bear watching as well Jul 21 2020 09:09 The main gravitational pull on UST yields and in far and away fashion remains monetary policy and the Fed’s guidance that it will stay at the zero-bound until further notice. This has effectively robbed the market of any sellers of note with buyers and mainly of the end-user variety in a queue trying their best to accumulate paper.

Being most sought out over the past several weeks are real yields otherwise known as TIPS. Indeed, since the beginning of June 10-year TIPS have seen their yields decline by roughly 37 bps (with 20 bps of the decline occurring this month) as the 10-year nominal yield declined by roughly 5 bps (from 0.66% to 0.61%) pushing out the break-even spread roughly 32 bps to -147 bps last.

Much of the improvement and outperformance in TIPS is seen as due to the complex making up ground lost in the early-to-mid March debacle when financial markets unraveled as Covid-19 washed onto US shores. In early March the 10-year TIPS B/E spread was at -147 bps only to collapse to -50 bps by March 19 to now return back to where it was in early March. Helping to make up this lost ground was/is the Fed’s large scale purchases that have an outsized effect supporting the more illiquid and lightly supplied TIPS complex.

The favoritism for TIPS is now extending into fundamental realm where the weakening dollar and the surge in precious metals and other hard assets is having investors favor the sector for their inflation protection attributes. As well, from a relative value perspective versus nominals they still appear as appealing from a total return basis. Even so, and as TIPS/real yields trend lower they are helping to underpin nominal yields as well. Rather than any connection to equities the current situation remains that of favoring the buying of dips in near all markets. Refinitiv Global Markets, Inc. is a Registered Investment Adviser. Refinitiv Global Markets disclosure statement is available on the web at

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Morning 7-21

European Bourses are trading higher 18-19 Stoxx 600 sectors higher led by banks, Autos and retail European bond yields little changed. Politico: EU leaders agree on a recovery fund made up of €390b in grants & €360b of loans attached to a new €1.075T seven year MFF, total package is worth €1.82T

   Dollar index DXY traded below important area of 95.71  Gold on the bid  +1% Silver on the bid as well  +5.7%!!  traded  above psychological $20 yesterday now above $21!!   Aussies Dollar +1%,Krone +.7%,peso +.61%  Weaker dollar=Risk On

 All about Stimulus and Vaccine headlines, doesn’t really matter if there isn’t much truth or facts behind them this is what the market wants to hear and will run with any Slightly positive headline  from Politico”

While top Trump administration officials publicly suggested Monday that the tax cut would be included in the GOP’s plan, Senate Republicans are expressing deep reservations. … Senate Majority Leader Mitch McConnell (R-Ky.) hasn’t tipped his hand in private on whether the payroll tax cut will be included in the GOP proposal. … Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows are expected to attend the Senate GOP lunch Tuesday.”

 Weaker dollar the New normal? With European Deal now signed and the member states working  with one voice  things look a  bit better for Europe and the euro  compared to the chaos here in the USA???  


  • UBS: Q2 Net Income €1.23b vs €973m cons; Q2 sales
  • -IBM: Q2 Op EPS $2.18 vs $2.12 cons; Q2 rev $18.12b vs $17.54b cons
  • Fauci will throw  out the First pitch at nationals game
  • Mnuchin will meet with Pelosi today

Where is the Vol?

JPM Global FX volatility index,60 min chart,July the Month of low Voaltility

1 week JPY vol. 60 min chart
1 week Euro Volatility 60 min chart

Nasdaq back to leadership role AMZN +6% Tesla +8%,MSFT +3% ,NDX +2%Russell down on day.RTY/NDX -2.5% after a few days of gains and Obituaries of NDX


NG -4.4% Corn -1% Wheat -2.5%

SPX gap in play above 3260 ish

Something for everyone

Chart Via Bloomberg

Below chart from ,Daily public transportation ridership for Chicago and Houston ( Chicago =orange line)

Silver futures >$20 first time in 4 years Cash market has yet to break that level.Real rates negative forever and demand for hard assets only going to increase,below spot silver

Spot silver Impressive run

Gold/Silver ratio more room for Gold to Run???

Precious metals doing fine but not so for base /industrial metals ,below is CRB rind (spot prices) industrial metals/Gold ratio near multi year lows

3mo-10 year yield spread not pricing in anything except complacency?