The “Softbank Squeeze” is being talked about all around Wall Street this morning/past weekend. Some very uncouth behavior on the part of the Japanese Bank over the past couple of weeks, where it’s being reported that levered up on $30B notional! is call options with high deltas (at or close to the money option trades), that created a massive gamma squeeze in FAANG stocks and the NASDAQ Index – hence the strange trading activity over the last 2 weeks where overall market breadth was very weak, but mega tech stocks were through the moon, so to speak. Nobody had the “cojones” to take the other side of the trade, until now, as the tied washes out exposing Softbank. Complete and utter market tomfoolery and manipulation.
US and Europe down big overnight – GER -1.68% FRA -2.16%, SP500 -1.3%, NASDAQ -3.00%
Shanghai Index +0.70%
VIX on the wrong side of 30.00, VXN on the wrong side of 40! this morning (probably most important). I’d say makes it a little more difficult for “Mr. Bull Market Genius” to manage his portfolio this morning. Risk happens slowly, then all at once.
Energy, and Metals are correcting this morning to the low end of their respective trading ranges. The commodity reflation trade is not over in our assessment – this should be viewed as an opportunity.
Crude Oil -15% w/w,
Copper -1.3% this morning,
Gold -0.43% (briefly testing the low end of our range this morning),
Coffee, Cocoa, Sugar -4.00%, -2.20%, -0.14% respectively since Friday.
All opportunities this morning.
US dollar is catching a bid +0.61% which I’d imagine won’t be viewed too friendly by Jerome Powell and his FOMC constituents.
I’ve got to keep it tight this morning, with the onslaught of activity. Back soon.