Well, the month’s finally coming to a close (THANKFULLY) and we’ve got supply behind us. Until next week, that is, when the quarterly refunding is announced (Thursday). There will be plenty of time to talk about that next week and we’ll take this opportunity to mention several things/links on today’s PDF. FDIC mentioned in our h’lines (we’ve provided link right to that sobering report) from yesterday afternoon. CNBC link (last bullet) suggests a possible unintended consequence of stress-testing the banks (it might actually discourage lending). ALSO, we’ve updated couple of pics of ideas/trades we’ve been interested in all week (2s/Shatz and 2s/10s) as neither of them have been particularly good BUT we’re still interested, with an even shorter leash on a day like today. We’re tired of the bond market NOT acting well on good news. We’re mindful of the Citi news (breaking as we’re hitting send) and we’re fearful a positive response in stocks makes BOTH ideas pictured on PDF get worse before they get any better. Finally, we’ve got a link to Comedy Central’s Colbert Report on bailouts. IF you need a laugh, we’d highly recommend it.
Here’s an excerpt of OUR PDF
For starters, we’re thinking about curve flatteners into month end and this has us thinking more bullishly, generally speaking. Seperately, we’re bullish on the front end vs Europe, given the sell-off here in the Treasury market that’s shown 2yrs the door right to 1.10%. Sweet. In the current environment of ZIRP (for the foreseeable future) along with econ data that’s going to continue to go from bad to worse, well we THOUGHT and are still thinking about fading the recent downtic. This in mind, and as we all know that misery loves company (?), we thought the following clip from BarCaps research note (linked to just below) was worth pointing out, given their propensity to think just like us!
All of that said, none of the things we’ve been watching for and trying to ‘play for’ have actually happened. Yet. It IS the end of the month so we’re willing to stay with some of these things (being bullish, in a more bullishflattening trade and being bullish of US vs Europe) for the moment. We’re certain to have a very tight leash and don’t wanna give anything significant back, especially NOT on a Friday. That said, we can’t help but think about supply behind us, even IF for only a week or so and econ data about to ramp DOWN growth realities (yes, GDP is old news, but as we said earlier, we think things will prove out to continue to go from bad to worse) and we’ll lean on this as cover to stay with things for the moment. In as far as defining ‘things’, we’ll bring forward a couple of pictures from earlier in the week of the trade ideas we’ve been liking and watching, realizing fully that they’ve not yet worked out too well!
First a look at OUR proxy for curve flattening … 2s/10s
Next up a look at our version of the HERE vs THERE trade (US vs Europe – front ends)
ALRIGHTY THEN … IT’S FRIDAY AND WITH THAT IN MIND, WE’RE GONNA TRY OUR HARDEST TO LEAVE ‘THINGS’ ON A MORE POSITIVE NOTE. And if we can’t do THAT based on the news and views, we’ll at least try and offer a bit of comedic relief. That in mind, we’ll turn your collective attention now to Comedy Centrals Colbert Report as he’s got some good material on bailouts – we’re ALWAYS looking for new and fresh ideas there, so click on the following link: Bears & Balls – Company Bailouts
Finally, Wednesday was Nate The Great’s 2wk birthday … and NO we’re not going to have updates weekly, promise! Given that things are starting to get back to some new sense of ‘normal’ though, thought we’d take this opportunity to link some pictures from yesterday while they are fresh in our minds … Here’s a link to Picasa Web Album (only a few pictures, promise) Nate The Great – 2weeks!!