The "Quadruple Witching" and Central Bank Crusading (w/ Raoul Pal and Ash Bennington)

TL;DR

The bond market is leading the way as the Fed's announcement of buying single corporate bonds sparked a rally in credit. The high-yield market continues to surge, while concerns about CLO risks are mounting.

Transcript

it's Friday June 19 2020 just after market closed in New York this is the real vision daily briefing I'm ash Bennington in New York joined shortly by our CEO and co-founder rappel from the Cayman Islands but first Jack Farley with today's stories thanks ash today we got to witness a quadruple witching on Wall Street one of those rare days where sto... Read More

Key Insights

• 🛄 The Fed's decision to buy single corporate bonds is aimed at preventing potential downgrades to junk status, which could create liquidity issues in the market.
• 🖐️ The spread between December 2020 and December 2021 euro dollars narrowing indicates that the bet on a curve steepening is not playing out as expected.
• 🤪 Wirecard, a German payment processor, faced a major scandal as 1.9 billion euros went missing from its accounts.
• 💼 The risk to investors is mounting as coronavirus cases surge globally, with the highest number of new reported cases recorded in a single day.
• 😀 The disagreement among European countries regarding a fiscal response and budgets highlights the challenges faced in dealing with the economic damage caused by the pandemic.
• 🚟 The Fed's decision to buy individual corporate credits aims to prevent the doom loop dynamics and potential downgrades that could impact the pension system.
• 🗽 The stimulation of the blockchain technology has the potential to reclaim some control over personal data and digital liberties.
• 👾 The upcoming Crypto Gathering event will bring together experts from various angles in the crypto space to discuss the potential for revolutionary change.

Questions & Answers

Q: What was the impact of the quadruple witching on Wall Street?

The quadruple witching resulted in a relatively muted price action in US equities, with the focus shifting towards the bond market.

Q: Why is the bond market driving the narrative?

The bond market is leading due to the Fed's announcement of buying single corporate bonds, which caused a significant rally in credit.

Q: What is the current trend in the high-yield market?

The high-yield market continues to push forward at a frenetic pace, making June the busiest month on record.

Q: What concerns are growing in the more illiquid side of the market?

Worries about CLO risks are mounting, which will be discussed in an upcoming interview with Dan Zwirn.

Summary & Key Takeaways

• The stock market experienced a quadruple witching, where stock market index futures, index options, stock options, and single-stock futures all expired on the same day.

• The focus is shifting from equities to the bond market, as the Fed's decision to buy single corporate bonds caused a rally in credit.

• Over $50 billion of investment-grade bonds were issued and bought this week, making it the busiest month for credit in record.