evening wrap

market vibes

April 7…)

“Fame is morally neutral.” Edward Morrow (Interesting idea)

Around 9:30 this morning, shortly after the equity opening, CNBC reported President Trump was considering a 90-day pause on tariffs for all countries except China. Carl Quintanilla implied the item was unconfirmed. The Dow was down 1200 at the time and rallied to +300. Perhaps an hour later, it was was denied by the White House. But… If you covered or went long it was brutal.

Rumors were around the markets and social media that HFs were dealing with the largest margin calls in many years. Noisy but also common at bottoms.

Two samples below.

"Hedge funds are facing the largest margin calls since 2020. Prime brokers report mass unwinds, derisking, and collateral stress across books. This is not visible in SPX charts yet, but beneath the surface, the system is cracking. Forced liquidations don’t [end well]."

"Hedge funds have been hit with the biggest margin calls since Covid... Wall Street banks have asked their hedge fund clients to stump up more money as security for their loans because the value of their holdings had tumbled."

In the markets

June gold is beginning to show signs of weakness. Development below 3 entire weeks of range above $3000 from March 21 to April 6 is above us. Oscillators are pointing down. Directional indicators are pointing down. Volumes are high. Lower prices or even horizontal activity will attract CTAs and systematic selling, imo. However, OI is falling fast and liquidation is orderly.

As far as the futures market is concerned, net spec length fell to the lowest in a year as of April 1, in last Friday’s COT report. From April 1 to present OI is down ca 30k lots so my guess is funds are def liquidating due to margin calls etc. Most of the gold being sold was acquired below $2500.

Black Monday didn’t happen today. Stock indexes managed a respectable rally on high volume to finish green. We are still in the vertical void. Anything can happen. Hodl. Diamond hands

Multiple X posts said China dumped $50 billion Treasuries today but nothing hard confirming it. The chart looks dicey and similar to gold. For my money, margin calls sound a lot more like it. Fifty billion is a hefty chunk in thin markets. When margin calls go out, everything goes, including employees. If true China has ammo to buy gold on a break.

Oil finished down a dollar on high volume. Open interest continues to rise bit by bit. Prices popped into the void above $62 this morning and gave it all back in minutes.

It was a little odd that a tariff pause rumor would rally oil. My take is the same algos reading news and operating in gold and stocks are operating in crude. Keep that in mind. I plan to make use of it.

Dec Red Dec traded negative .13 and settled +.06. Front spreads were steady at .25 to .30 back. Product spreads and cracks are choppy … Heat spreads are tight in the front.

Bitcoin had an $8000 range, finished down $5000 on the day at $79k…ETH broke $1500. Certainly no fun owning it. Expensive carry, but definitely outperforming the 60/40 trad allocation.

my vibe

Starmer’s speech was a nothing burger. A pity. Europe can’t win this, imo. I saw a post that said the AFD was tied for first place in Germany.

A handful of senators are writing a bill to block Trump from using his various powers to put tariffs on imports. Trump said he’s veto it. Down in flames. China will face tariffs of 104% if terms are not met by April 9. The rub is retaliation. If they don’t, we won’t… China is retaliating. I think China is so used to getting their way that can’t make this deal. But they will.

Bessent says as many as 70 countries are in touch opening negotiations. That means these tariffs are going into effect now and will remain in force until acceptable deals are done. We’re looking at months, not weeks.

Trump: “We are meeting with Iran on Saturday.” Dovish oil?

I wouldn’t be surprised if the fake “90 day pause” was foisted by someone at CNBC. I am exhausted. Unfortunately it not over yet.

one of my favorites

Good luck in Asia!

JJ

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