Europe- They’re a mess right now. Unemployment levels are rising across the Euro Zone as Government subsidies and stimulus wane and a second wave of virus infections manifest across the region.  UK Employment levels fell by the most in 11yrs as PM Boris Johnson begins to implement rolling shutdowns. The GER ZEW Business Sentiment Index fell to its lowest levels since May. More “stimmies” likely on the way from the ECB and Christine Lagarde.  We remain near-term BEARISH on Europe and the EUR/USD in Q4. 

NASDAQ- Low volume, and another Gamma squeeze was reminiscent of late Aug/early September. A few things contributing to the move, 1. Option dealer’s caught offsides on short out of the money call options on big tech names were forced to chase/buy futures/options contracts in an effort to stay neutral/hedged, 2. A heavy short retail position according to the CFTC Commitment of Traders report last week, 3. Low volume days (such as yesterday) make the market tape quite susceptible to big price moves.  Also, reminiscent of late Aug, was the VXN (NASDAQ Volatility Index) was +6.00% yesterday – typically volatility moves counter to the index price. 

Commodities- have kind of floundered since the start of Q4.  Following the big “reflation” trade from June to September, the CRB Index has just chopped sideways and looks like it could roll over in Q4.  Other than our long dollar in Q4 call, we haven’t shorted too many commodities, and we may not. We do see another reflation/inflation trade coming out into the first half of 2021.  But, it’s Q4 2020 so we’re just going to keep 1H 2021 right there, in 2021.

Other notable moves overnight:

Global Equities:
SPY -0.12%, NQ +0.79%, RTY -0.81%

GER -0.66%, UK -0.10%, FRA -0.37%

Shanghai +0.04%, KOSPI -0.02%

Copper -0.39%

Oil +2.23%

10yr UNCH at 77bps – totally unphased by this recent move in Nasdaq

Gold -0.16%

Silver -0.76%

USD +0.14%