Bill Cara’s Morning Call
Yesterday’s weather forecast proved accurate, and judging by the look of trading at most of the international stock exchanges today, except India, the storm clouds have remained. Traders who have a few years experience at these things are now waiting for a tropical cyclone to strike, and the storm appears to be gathering in the land of make believe aka banking and finance.
The TED Spread, which has been falling all year now appears ready to rise, which as and when it happens puts a squeeze on US credit easing, lifting the $USD.
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND
http://en.wikipedia.org/wiki/TED_spread
Traders, in turn, are selling risk and buying Dollars. The December Dollar futures are now trading at 75.855 (up +0.64%), mostly against the Pound, Cdn Loonie, and Euro, while the Yen is flat to the Dollar. The words ‘safe haven’ will be used prominently this week and probably next.
Presently, the DJIA Dec futures are down -60 and the S&P 500 down -6.4. So, with US equity futures down, UK, Europe and Asia-Pacific equity prices down, Jan. Crude Oil ($WTIC) down -3.00 in 24 hours to 77, gold down about -$3.40 and silver down about -27.5 cents, the outlook for today is probable rain, despite the weather futures looking up.
Take heart; it’s Friday.
Have a great day.
CTA Trading Desk Report
Same old story as institutional trading desks played pin the stock to a strike, doing their best to extract as much premium as possible from the expiring November options. It is not quite as fishy as Goldman Sachs making $100 million day after day; but seriously -- and I want everybody to get serious here -- how does Google (GOOG -0.56%) manage to get pinned to a strike time after time?
Hopefully there are some SEC people listening here. Today, the GOOG at-the-money 570 straddle was offered at $1.80 with 5 and a half hours left in the trading day. Since the daily range over the past 20 days is 8.39, someone was very confident (I.E., informed) the stock was not going to stray too far from the strike. Lo and behold, wonders of all wonders, the 570 straddle went out worth less than .04 cents, as the stock closed at 569.964.
Other high-profile stocks going right out at the strike were AAPL closing at 199.95, ESRX at 85.09, PBR at 50.06, QCOM 45.09, and KO closing right on the 57.5 strike. How much extra chump change do these Wall Street trading desks pocket?
You would think the SEC might ask a few statisticians to come up with the odds these stocks could go out at strikes time after time; about the same odds as one of these firms getting busted for stock manipulation?
A very quiet expiry with the only excitement the bogus US dollar trades flashing across the electronic terminals in the middle of the night, erroneously suggesting the dollar had surged up over +10%, causing S&P futures and gold futures to sag in early morning Globex trade. The dollar trades were later cancelled, however, and equities remained in a narrow band, finishing slightly lower on the day (S&P –0.32%).
Next week, the pace of trading will dwindle as the US Thanksgiving holiday approaches. We should expect some sort of firming early Monday, but would expect Bulls to have difficulty punching above 1105. For bears to conclusively regain control, the S&P needs to close back under 1080.
For all those traveling and getting together with loved ones, have a safe journey, and enjoy the joyous celebration.
Have a great weekend.
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