8 replies to this topic

[Geomean]

Bloomberg live this am has been talking about the recent spike in the Libor OIS spread to levels not seen since the Great Recession and whether it is warning of trouble in the financial sector. Google the phrase for links to a number of differing opinions on the subject of whether it is a warning. It seems all the commentators agree that the Libor OIS spread is a measure of declining liquidity and increased credit risk. Where they seem to differ are their explanations of the sources of those changes and their impacts, all mentioning repatriation, Fed tightening and massive Treasury borrowing, unsure of the counter-party risk component, and all not quite sure of their combined effects. This is a very different measure than the Financial vs non-financial commercial paper differential Mark tracks weekly.

[NAV]

It's is an important indicator to keep an eye on. Markets are all about liquidity and any indicator which measures liquidity is worth keeping an eye on.

 

Also keep an eye on GE. There is something terribly wrong there. It's plunging day after day, week after week, month after month.

[CLK]

WFC is testing the crash lows, either it bounces here or drops another 10 points.

 

 

 

[CLK]

Real estate turned down a month early at the top.

 

 

[SemiBizz]

TADA...

 

 

IT IS DB ...

 

DOWN 4%

 

BREAKING THE LAST LOW....

[kaiser soze]

Yes, LIBOR-OIS spreads are widening.  Sooner or later, this will translate into major financial stress in the Eurodollar market.  Who is most dependent/leveraged on Eurodollars ?  It is European financial institutions.  Asia is also dependent on the Eurodollar but the dependence is much less now due to Yuan liquidity aggressively pushed by the PBOC and the Chinese government. 

 

European stocks should take a major hit and this is what the charts show as well. DAX, FTSE, STOXX are struggling to achieve any sort of bounce.  The European indices are likely to break the March lows decisively.  Europe will get sicker as the Euro appreciates, and as Brexit negotiations become more of a quagmire. I'm looking for good vehicles to short Europe.  The "C" down everyone is expecting might happen in Europe instead of in the US.

 

It is not clear to me at all that the US stock market as a whole will be massively impacted although some sectors such as Consumer Staples & Healthcare (huge European revenues) and Basic Materials might see further downside.  On the other other hand, US Tech stocks might prove resilient in spite of the envious attempts of Brussels to hurt them.

Edited by kaiser soze, 21 March 2018 - 07:52 AM.

[SemiBizz]

DB PLUMMETING...

 

DOWN 6% PREMARKET 14.56

 

NO BIDS

[Geomean]

Interesting responses.  Thx.  This was a new indicator/measure for me. 

[kaiser soze]

I have a hunch FOMC statement will be hawkish.  Imagine what that'll do to spreads.