Morning 8-21

 The Unwind of the “Short Dollar trade buy everything else “continues today, DXy +~1.3% from Wednesdays lows the demise of the dollar put on hold for a bit and aggressive selling in other assets classes picking up speed.  Spot euro 200 pips off of Wednesdays highs,1.200 was on the radar at that time now trading 1.1765,Gold at 1926 ~5% lower from Wednesdays highs, Silver ~7% over same period Even copper which has been somewhat insulated from DXy gyrations is down ~ 3.9% from Wednesdays high…

  The Catalyst for today’s action is European PMI data which shows a slowdown in the recovery, I mentioned the Citi EZ economic surprised appeared to be topping, Overnight data confirms this.

Europe (ITC Markets)

  • -French Aug Mfg. PMI (prelim): 49.0 vs 53.7 cons
  • French Aug Services: PMI (prelim): 51.9 vs 56.3 cons
  • -German Aug Mfg. PMI (prelim): 53.0 vs 52.5 cons
  • -German Aug Services PMI (prelim): 50.8 vs 55.1 cons
  • -EZ Aug Mfg. PMI (prelim): 51.7 vs 54.5 cons
  • -EZ Aug Services PMI (prelim): 50.1 vs 54.5 cons
  • -Spanish June Trade Balance: +€1.48b vs +€124.4m prior
  • -Spanish Trade Ministry: Trade deficit -48.5% to June y/y

The French numbers appear to be the one to upset the apple cart, so to speak. Look at a DXY graph and you can see the rally started as the French numbers hit the wire. The buy Europe sell   The U.S. theme also taking a hit today as the belief that Europe recovery is a bit a head of the U.S. lacks evidence. From Mizuho “TICKET VOLUMES FOR CROSS-BORDER AIR TRAVEL WITHIN EUROPE AT 28% OF 2019 LEVELS IN JULY BEFORE FALLING TO 18% IN FIRST WEEK OF AUGUST – DATA PROVIDER FORWARDKEYS”

Economic recovery Stagnant…Spoos -.5%.nas -.4% Stoxx 50 -1.3%, Dax -.9% MIB -1.25% Gold -1%, Silver -3%, Copper-1.8% Bonds and Bunds up   …30’s and 10 year yields 10 bps lower vs 1 week ago


  • House Speaker Pelosi: not the right time for a smaller relief Bill
  • Pres Trump: says if he’s re-elected, would impose tariffs on US firms that refuse to move jobs back to the US
  • Hungary to tighten border crossing as of Sept. 1 to curb spread of coronavirus – PM Orban – Reuters
  • Merkel Warns Europe Against New Virus Lockdowns ‘At Any Cost’ (BBG) last thing Europe needs or wants is another round of Boarder shutdown
  • Brexit. Sources: Talks set to end without any breakthrough after UK submits FTA (Broker talk)
  • Gen Z and Millennial investors are trading more frequently, and they have discovered the joy of gamma. More specifically, this group buys upside (out-of-the-money) calls, with the result that the other side of the trade is left with a short gamma position that must be hedged by buying the underlying security in rising markets. Over half of investors (51%) under the age of 34 said they are trading equities and 46% said they’re trading derivatives more frequently since the pandemic, compared to 30% and 22% of the total population, respectively (E*TRADE quarterly tracking study)-Mizuho

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