Archives of “September 7, 2020” day

rss

BofA buy target for the NASDAQ

  
Analysis, US Market

Via a note from Bank of America’s chief investment strategist, looking for US stocks to slide a little further.

And then rebound ahead of the US  November election. The recent fall (still ongoing) is due to investors losing patience with the lack of further fiscal support from the US Congress.
Targets the S&P 500 to 3,630 prior to November,
  • Says to buy Nasdaq Composite at 11,000
On policy:
  • Historic policy shift underway at Fed
Says Fed is willing to let financial assets overshoot to
  • a. stoke employment & wages,
  • b. finance fiscal excess
Further adds that the market knows Fed will ‘intervene’ to prevent <1% Treasury yield which has allowed SPX multiple to break 20x .
  • & global central banks’ easing programs are “operation warp speed”
Ahead:
  • key catalyst for a further market rally is more fiscal stimulus
  • & a viable coronavirus vaccine

Brexit – FT reports the UK is planning a new move that risks the collapse of talks with the EU

  
  Analysis

Brexit reporting from the Financial Times … the long story short is the mooted moves from the UK would undermine the withdrawal talks/agreement.

Which is thus a negative input for GBP. Its thin and illiquid still, cable currently quoting in the  circa 1.3240/45 area
Says the article:
  • UK is planning new legislation that will override key parts of the Brexit withdrawal agreement
  • risking the collapse of trade negotiations with the European Union
The legislation referred to is part of the internal market bill (due Wednesday) – expected to “eliminate the legal force of parts of the withdrawal agreement” in areas including state aid and Northern Ireland customs.
FT citing “three people familiar with the plans.” Says doing so would “clearly and consciously” undermine the agreement on Northern Ireland that Boris Johnson signed last October to avoid a return to a hard border in the region, one person with knowledge of the plans said
Here is the link to the FT piece (may be gated).
Brexit reporting from the Financial Times ... the long story short is the mooted moves from the UK would undermine the withdrawal talks/agreement.  

Brexit – UK says not afraid to walk away from talks. Less than 20% chance of a deal.

  
Analysis, Forex
#  #  #  #  #  #  #  #  #

A couple of UK media items on Sunday with Brexit developments.

The UK’s chief Brexit negotiator David Frost spoke with the newspaper the Mail on Sunday
He said that the UK would leave the transition arrangement “come what may” in December. That is, deal or no deal the UK is out.
Meanwhile in the Sunday Times:
  • planning for no-deal has ramped up
  • senior figures in government have predicted that the chance of securing a Brexit trade agreement with Brussels is now less than 20%
Links for each (may be gated) if you’d like more
GBP is trading on wide spreads in early movement. Its just before:
  • 8 am in NZ
  • 6 am in Sydney
  • 5 am in Tokyo
  • and 4 am in Singapore & Hong Kong
If you are familiar with how forex market times work you’ll know that liquidity right now Is super thin. GBP swinging a little:
A couple of UK media items on Sunday with Brexit developments.

SoftBank sits on $4B profit on options trade – FT

  
  Analysis
#  #  #  #  #  #  #  #

SoftBank up $4B

SoftBank up $4B
All the talk Friday was about SoftBank’s huge position in equity options and how it may have contributed to the blow-off moves we saw in the tech sector last week.
The FT reports that the trade is sitting on a $4 billion trade.
For all the attention it has gotten, that strikes me as a small number. Founder Masayoshi Son once lost $70B in the dot-com crash and the company is worth close to $100B. SoftBank lost $17.7B on WeWork and Uber last year.
The strategy has focused on options related to individual US tech stocks. In total, it has taken on notional exposure of about $30bn using call options – bets on rising stock prices that provide the right to buy stocks at a preset price on future dates. Some of this position has been offset by other contracts bought as hedges.
“It’s just a levered punt on the market,” said one person with direct knowledge of the trades. “The whole strategy is just momentum buying.”
Without knowing the details of the trade — including the timeline — it’s tough to evaluate. However if the whole strategy is really just momentum buying, then Thurs/Fri showed how quickly it could blow up.
For me though, the whole thing is overblown. $30B is notional (again, depending on the details), really isn’t that much.
Go to top