Unprecedented Options Volume, Hints of a Market Top, and Evergrade Goes Past Due
September 27, 2021 | FIRESIDE CHARTS
Retail investors are at it again and have helped push daily stock options volume to unprecedented heights. With the broad U.S. corporate debt-to-equity ratio falling to historic lows as valuations swell and sending signals of a potential market top, are these DIY investors embracing increasingly high-risk strategies at a potentially disastrous moment? Meanwhile, with some hawkish sentiment, massive spending packages, and political tension over a potential October 1 government shutdown brewing in Washington, the yield curve is steepening, and it may even light a fire under the USD. And now that Evergrande has formally defaulted on its coupon payment, what lies ahead for it and the similarly battered Chinese real estate sector?
1. The stay-at -home do it yourself investor has embraced options. Do they know the risks? Do they care (yet)?
Source: The Wall Street Journal, from 9/27/21
2. A sign of a market top?
Source: Federal Reserve; BofA Global Research, from 9/27/21
3. Fed talk, especially about the transitory inflation become not-so-transitory, together with Evergrande default woes and massive legislation in Washington, all helped push rates higher from one year out:
Source: The Chart Store, from 9/26/21
4. Will higher interest rates propel the USD to break out?
Source: The Chart Store, from 9/26/21
5. Evergrande missed last week’s payment. Here is what they face in the coming months:
Source: Scotiabank Economics; Bloomberg, from 9/27/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.