ephemeral
market vibes
August 5…)
“In bear markets stocks return to their rightful owners.” J P Morgan
In data this morning: The US balance of trade narrowed to $60.2 billion the narrowest since September 2023.
At 10:00 ISM reports PMI services rising, new orders rising, employment falling, business activity rising, and services prices (chart below) rising. I am interested in prices Chart below).
The treasury auctions 3 year notes at 1:00 PM EDT the API reports on petroleum inventories at 4:30 PM EDT.
In the news
Palantir reported sales up 48% (FT). AMD reports today. BP beat estimates on strong trading.
Diamondback warned of a supply glut in a note to investors yesterday. China now buys zero U.S. oil, and China’s imports from Brazil are up 60%. Trump and India agree to disagree. Talks continue, but the mood is chilly.
As for US sanctions on Iranian oil, various sources are reporting Iran's production and exports of all petroleum fluids (crude, condensate, and nat gas liquids) are at record levels of 5 mm barrels per day and 2.5 mm barrels per day, respectively (Reuters).
In the markets
S&Ps are a little higher on a narrative that equities are discounting good earnings and a rate cut in September, two ephemeral narratives. Last week, the usual suspects pushed prices lower: a dubious employment report and a frothy retail long position.
The difference between a 100% algorithmic market and a physical commodity market like crude oil is AI contrives prices out of nothing, and people explain them with narratives. In oil or gold, an auction balances tangible material that is actually consumed and settled for cash (more on this in the vibe).
Today, the flavor of choice is a familiar thread: “The future and the FOMC’s consent to cut rates,” neither of which can be loaded in a truck or a ship and delivered to a buyer, DVP (delivery vs. payment).
On tap today, gold is decelerating, oil is gravitating to its POC in the mid 60s, natty is getting short, and bitcoin is losing mass but not altitude, plus a limited supply of nothing in the vibe…
