Authored by Peter Tchir via Academy Securities,

I really wanted to title today’s report “Don’t Cry for Me Argentina” so that I could write about how amazing the country is! Great trip and while I had high expectations, those expectations were far surpassed by the actual experience.

Then, I started leaning towards “Road to Nowhere”. In the past 2 weeks, the 10-year yield is up 18 bps, but the S&P 500, Nasdaq 100, and credit spreads are basically unchanged. Even bitcoin is unchanged, although it did surge and drop 10% during that timeframe. However, I already used “Road to Nowhere” as a title so I couldn’t use it again. Side note – the SNL skit “Flight to Nowhere from LaGuardia” is still one of the better skits I’ve seen in years on that show.

I could write about the Citi Economic Surprise Index and while it has “stabilized” for now, I expect it to drop further.

I could write about the T-bill market where the curve is finally attracting some attention. T-bill yields are as low as 3.3% out to May 23rd. They start rising a bit from there (climbing to 4.1% by June 1st), but then normalize somewhere around 4.9% post July. So far, this weirdness is limited to the T-bill market, where a subset of large investors can only do T-bills and seem to be skewing their purchases to maturities before the debt ceiling would be “breached”. The T-bill market is hinting at concerns and issues around the debt ceiling, but it is not having undue influence on other markets (SOFR, CP, etc.).

We could also analyze the creation of a 0DTE VIX (a VIX index that is based on shorter dated options), but it just isn’t ringing any alarm bells (or at least nothing new about the “gambling” nature of the 0DTE options market). I “know” that VIX is around 17, but to be perfectly honest, VIX is so far down on my current list of potential signals that I only know it is below 17 because there is so much chatter about this. The “new VIX” could be interesting because I think that 0DTE is where a lot more people are placing their hedging bets.

We could write about the demise of the dollar, but the Chinese Yuan is weaker than where it was in January, so there isn’t an urgency to this story.

I do want to write about the transition from “Made in China” to “Made by China”, but that isn’t urgent, and it will be long enough to be a separate “thought piece” (much like our Olympics as Bookends or Recentralization of China reports).

Earnings season has started, but I’m finding it inconclusive so far (I want to see “weakish” reports met by rising stock prices to turn bullish here).

On mornings where we sell-off (followed by buying in the afternoon), it is hard to tell if it is simply shorts getting squeezed, new longs being set, or something else altogether. However, I am leaning towards viewing the market as being “neutral” in terms of positioning.

Maybe 10 days away from the screens and news flow has “dulled” my anger. Maybe, as a contrarian who does tend to “rant” rather than “write”, I need that anger to write?

Or maybe, the markets are just that dull! I was going to go with “Home, Home on the Range” but that seemed like a cop-out.

As I get back in the “saddle” there will be a lot to write about, and I do think that the debt ceiling will be an issue that could hurt markets. I have little faith that D.C. can “maximize” their benefit from this round of debt ceiling “side deals” without triggering at least one round of serious Planet of the Apes “you finally, really did it” recognition by the markets.

I do think that geopolitical risk is underpriced, but that too is part of stories and themes that go beyond the next week or two of earnings releases.

Bank earnings seem ok, but again, the battle over what banks have to pay on deposits to keep deposits in the banking system has moved to a phase where it will take much longer to play out than when people were just afraid of default risk (which was heavily overstated).

I’ve tweaked the rate section from 2 weeks ago, but little else has changed. Part of this is because I don’t have the anger and I’m still getting back into the “grind” after a nice vacation. But so little has changed in two weeks that I’m not sure why I’d change my view?

Maybe staring at screens will make me angry enough to want to write more.

Or, maybe, markets will actually give me something to write about rather than just seesawing back and forth in small ranges.

In the meantime, let’s see how this week plays out as we will get more debt ceiling headlines and earnings, which will hopefully translate into some interesting market moves and opportunities!