Daily Clueless Musings 2/19

HP blamed weak US consumer for its terrible earning. Both home depot and Lowe’s guided lower than streets expectation. It seems that the mass retailers did not do as well as the high end ones in the last quarter. The former is more correlated with labor market, while the later draw their pay check from stock market. Good job, Ben! On the bright side, January reading of Existing Home Sales was higher than expected. Outside the states, the unrest in middle east shows no signs of easing. There is rumor about anti-manarchy protests being planned for tomorrow in Saudi Arabia. Oil traded higher and skew flipped to the call skew aggressively. The potential disruption of oil supply and higher oil prices led to higher demand for hedging and speculative buying.Fixed income traded well even after a slightly disappointing 5 year treasury auction. But the back end of the yield curve steepened as soon as stock bounce back from its lows. Vols were sold off before the back contracts traded lower. While gold and silver are trading close to their all time highs and the real hedgers bid up call options on oil futures, stocks and yield curve continue refusing to price in geo-political risk.