Archives of “June 2020” month

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CFTC commitments of traders. EUR longs at highest since May 22, 2018

  
Analysis, Forex

Forex futures positioning data for the week ending June 9, 2020.

  • Prior week
  • EUR long 96K vs 81K long last week. Longs increased by 15K.
  • GBP short 24K vs 36K short last week. Shorts trimmed by 12K.
  • JPY long 17K vs 33K long last week. Longs trimmed by 16K.
  • CHF long 2K vs 9K long last week. Longs trimmed by 7K.
  • AUD short 37k vs 41K short last week. Shorts trimmed by 4K
  • NZD short 11K  vs 13K short last week. Shorts trimmed by 2K
  • CAD short 25k vs 33K short last week. Shorts trimmed by 8K

Highlights:

  • EUR longs at the highest level since May 22, 2018

Forex futures positioning data for the week ending June 9, 2020.

Hertz wins approval to sell shares from bankruptcy judge

  
  Analysis
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What a sordid saga

What a sordid saga
This Hertz fiasco is one of the most-sordid, depressing stories in market history. The company shares are worthless or close to it.
Yet somehow Robinhood traders were duped into pumping it.
The bond holders need to be made 100% whole before equity gets a sense. To give you a sesne of where that stands, the 2022 bonds are trading at 42-cents and that’s about par for the course. There is a total of 5.5B in debt outstanding overall so at 42% recovery, that’s something like a 2.3B shortfall.
That all needs to be paid out by liquidating whatever assets are left.
Somehow the equity is trading at $2.83 and the bondholders got the idea to sell $1 billion in shares, which was approximately 247m shares at the levels where they petitioned the judge. That compares to 142m currently outstanding in the entire float.
The bondholders have been honest with the judge. They told him “the common stock could ultimately be worthless.”
But, hey, if we offer $1B in shares and someone wants to buy them, who is the judge to stop it? The judge just agreed in a decision shortly after the close.
Now I don’t think they’ll actually be able to float that much stock at reasonable levels but in this market, you never know. In any case, that money will go straight from the stock holders to the bond holders who no-doubt can’t believe their good fortune.
The NYSE is already in the process of delisting HTZ.
On the one hand, this is hilarious. On the other, it says so many bad things about market functioning, the intellect of market participants and the overall madness of crowds; that it’s frightening.

Stocks rally into the close but still off highest levels

  
Analysis, US Market
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Stocks have worst week in 3 months

The major stock indices rallied into the close but are still selling off the highest levels.

  • The stocks have the worst week in 3 months
  • Dow and S&P have their 1st positive day after 4 days down
  • stocks rebounded after the plunge on Thursday
a snapshot of the major indices at the close shows:
  • S&P index +39.21 points or 1.31% at 3041.31
  • NASDAQ index rose 96.02 points or 1.01% at 9588.80
  • Dow rose 477.37 points or 1.9% at 25605.54.
Although higher, the gains were well off the highs but also well off the lows (closing around mid range).
  • S&P index was up as much as 2.88% but was as low as -0.59%
  • Nasdaq index was up as much as 2.91% but was as low as -0.83%
  • Dow was up as much as 3.33% but was as low as -0.20%.
Below are the % high, low and closes for the major NA and European indices for today.
Stocks have worst week in 3 months For the week, the major indices all fell with the Dow the weakest.
  • S&P, -4.78%
  • Nasdaq, -2.3%
  • Dow, -5.55%

Eurozone April industrial production -17.1% vs -18.5% m/m expected

  
  Analysis
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Latest data released by Eurostat – 12 June 2020

  • Prior -11.3%; revised to -11.9%
  • Industrial production WDA -28.0% vs -28.8% y/y expected
  • Prior -12.9%; revised to -13.5%
Those are some horrific numbers but again, it isn’t surprising at this stage since we know that April is the worst month in terms of economic activity due to the widespread lockdown measures in the region and the peak fallout from the virus outbreak.
This all just serves to reaffirm that Q2 economic conditions are set to be the worst in history for the euro area – much like most parts of the world.

Ryanair, EasyJet, British Airways launch legal action against UK government over quarantine rules

  
  Analysis

The airlines are demanding changes to the government’s quarantine rules

The UK government had imposed a ruling from 8 June that any traveller will have to self-isolate for two weeks due to the coronavirus outbreak situation and the decision has irked airlines, who are arguing that it is not necessary to do so.
That is resulting in the legal action being taken here, although I’m not sure how this will actually play out to be honest.
But the airlines are demanding the government to adopt back its previous quarantine ruling back in March, whereby only travellers from “high risk” countries are needed to adhere to the two-week self-quarantine period.
Not the least bit surprising as a two-week quarantine would basically defeat any purpose of travel to the UK for business/leisure at this stage. And that’s bad business for the travel sector and for airlines in general.
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