Here is our latest conversation …. new insights for anyone who invests in anything.
The European mess is getting messier. We take a look at some of the important risk indicators that are at the highest level since the Lehman bankruptcy. Also, Zynga’s options mess is contemplated along with some thoughts on the $5 billion lass at the U.S. Post Office.
Cisco (CSCO), Apple (AAPL), IBM (IBM), Groupon (GRPN) and other stocks are discussed.
Euro 3M Basis Swaps – Hitting -119 is not good!
This is an important chart EU 3M Swaps – An FX swap agreement is a contract in which one party borrows one currency from, and simultaneously lends another to, the second party. Each party uses the repayment obligation to its counter-party as collateral and the amount of repayment is fixed at the FX forward rate as of the start of the contract. When the Euro/USD basis swap starts to move lower, it can be seen as a time when the risk of owning Euros over U.S. Dollars is increasing. Many believe that the -100 level is a key level that should be watched and -150 is a time when a crisis is occurring. Currently the level rests at -119, the lowest since the time of the U.S. banking crisis.
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Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.