a minor epidemic
market vibes
January 13… )
in the news
Headline CPI came in unchanged, Core fell a tenth to .2% vs .3% expected. The stock market had a mild pop and fizzled.
The DOJ’s investigation of Jay Powell is beginning to sink in. I think it’s a backdoor Fed audit that’s been a long time coming. The threat to Fed “independence” is spot on. Better said it is a shot heard around the world of major money center banks. The threat is to unfettered moral hazard. I have a hunch there will be some juicy scandals for the press.
Trump’s edict capping credit card interest at 10% is a de facto rate cut for the middle and working classes. It is delicious irony that Trump and Liz Warren are on the same team!
The CME Group has implemented a significant change in how margins are calculated for precious metals futures, shifting from fixed dollar amounts to percentage-of-notional-value rates. This takes effect after the close of business tonight. Margins are now fully dynamic: as silver prices rise further, the margin requirement increases proportionally (and vice versa if prices fall).
In the markets
Silver is up another 5% as I write, and initial margins are calculated at 9% of price or circa $40k at $88/toz. Dynamic margins allow FCMs to accurately margin their clients positions and investors to monitor their margin risk in real time. Although silver prices are rising rapidly they are not disorderly so I don’t see higher prices per se changing this policy. if the market does become disorderly the exchange can easily increase the 9% threshold to 10% or 15% depending on conditions.
Hourly data implies a steady incremental competition for sellers with very few gaps in liquidity. No stress. Just straight up.
