Market Morning: Flood of Paper, Valeant Shorter Targets Tesla, Super Micro Spyware, Google+ Kaput

Primary Dealers In Treasuries Flooded With Paper As US Auctions $74B This Week

The Treasury will sell three-year, 10-year and 30-year bond supply this week, worth $74 billion. The benchmark U.S. 10-year Treasury note’s yield hit a seven-year high at 3.261 percent on Tuesday. Since the Treasury will finance the Federal budget deficit at any rate, expect rates to keep chugging higher and crowd out private borrowing. China’s foreign exchange reserves have fallen by about $75 billion year to date. China is the #1 foreign holder of US Treasuries. The 10Y is holding at 3.223% this morning. Bond market analysts are warning that the increased uptake of Treasuries by primary dealers, meaning those who trade directly with the Federal Reserve, may simply be buying for the purpose of maintaining their status as primary dealers, and quickly flipping the paper for a profit, akin to what an underwriter does when acquiring stock at a discount to market rates directly, selling them in order to lock in a profit. When this model breaks down and primary dealers can no longer flip the paper, the status of primary dealer may no longer be worth it and they may start curtailing their purchases, which could mean big trouble for Treasuries.

Related Tickers: (NYSEARCA:TLT) (NYSEARCA:BND)

SEE: Yale University Endowment Invests In Blockchain As The Scramble Heats Up

Short Seller Who Bet Against Valeant, Bets Against Tesla

Fahmi Quadir, who bet against the pharmacist formerly known as Valeant, currently known as Bausch Health Companies (NYSE:BHC), but never known as Prince, is now betting against Tesla (NASDAQ:TSLA). Quadir bet against Valeant back in 2015 when the stock catapulted to nearly $250 a share. It was then caught in an accounting scandal with subsidiary Philidor in something of a double-counting scheme, and the stock proceeded to crater into the teens. Now Quadir is claiming that Tesla is going to have to raise capital soon, and this is going to cause the stock to crater as well. “It’s becoming more and more apparent that Tesla is having difficulties paying their bills,” Quadir said. “I saw a lot of the same with Valeant.”

New Spyware From China Discovered Grafted On Ethernet Cables From Super Micro Computer

This isn’t going to be good for the worsening trade war between China and the US. Hardware security specialist and former Israeli Army intelligence officer Yossi Appleboum of Sepio Systems has discovered new spyware on Ethernet cables from China, manufactured by Super Micro Computer (OTCMKTS:SMCI) in an attempt to steal technological knowhow from the US. Appleboum has stressed that Super Micro is a victim here and did not collude in the Chinese efforts. Expect the news to prolong the current trade war that was initiated on the grounds of technology and IP theft, as the Trump Administration will feel more justified in taking this course of action despite the economic consequences of doing so.

Google Fails at Something, Covers it Up, Angers Everyone

Despite the explosive popularity of Google+ that has taken the world by storm ever since its inception, nobody seems to care that it’s been shuttered due to a glitch that exposed user data to hackers. That’s because nobody ever really used the thing. Data from 500,000 accounts was exposed from 2015 to 2018 and the company had covered it up, patching the bug in March 2018 but not reporting until this week. Alphabet (NASDAQ:GOOGL) shares have not been majorly impacted, probably because most people haven’t realized that Google+ even still existed.

 

An ad to help with our costs