evening wrap, august 6

market vibes

“We’re going to beautify this city. We’re going to make it beautiful. And that includes bringing in the National Guard.” Trump’s response to questions about crime in Washington DC during a press “gaggle” at the White House this afternoon.

In the markets today…

Like clockwork, buying on high tick volume at the opening bell steadied stock indexes. After an hour of that, around 10:30, a classic twapping program rallied prices in a narrow channel until 12:30.

The market drifted near the highs until the final minutes, but profit-taking denied the buyers a new high in the closing range. Robotic trading is quite amazing. If conditions are “true,” the algo proceeds until they are not true.

In the market for stocks, the usual leaders paved the way higher. AAPL +5%, TSLA +3%, all the mags were up except MSFT. These names and their ilk are the tip of the Trumpian spear. When he talks about trillions he’s talking about them.

A gap higher in NDX tomorrow ( next chart) and a strong close tomorrow should shut the bears down. However, we’re not there yet. A close under Friday’s lows… implies trouble.

The DOW lags because the index is price-weighted, so from a pairs perspective, it’s easy to sell against NDX, especially on a day like today. Goldman Sachs is the most dominant stock in the DOW at $167 billion market cap. AAPL was up 5% today and, at >$3 trillion market cap, AAPL is actually the 10th most influential equity in the DOW.

NDX and the S&P are market-cap-weighted, so risk concentration in a handful of stocks facilitates economical price control of the indexes.

Gold has decoupled from the financial world. Nothing has changed in months except the expectation prices will move. I’m sure the sellers of risk premia and shorts earning contango are happy. Miners are happy. But the owners of the metals are losing the carry every day. I’m not sure that matters. The public is in the stock market, and bullion is in the central banks.

WTI had a $3 range and finished on the lows. Spreads have completely ignored the India squeeze narrative, and the front of the curve (except Sept/Oct) made new lows for the month and quarter this afternoon. These are trends.

Volumes picked up a bit, and open interest declined a bit. Oil looks hedged across the board. It appears… oil markets are in the midst of discounting the worst possible effect of secondary sanctions and they still have wood to chop.

A Trump Putin meeting is floating around, perhaps next week. Trump said he’d go if a truce was a sure thing. Don’t hold your breath but peace at this stage means a formal treaty. In that kind of scenario, long “hedges” become “longs.”

In other markets, the 10-year auction did not go well, a big tail, largest in a year, and low bid-to-cover. Bitcoin folks continued to hodl.

One more image to round out the day: Super Micro missed an earnings estimate. I’ve seen it happen to META and many other stocks that miss estimates over the years. Algorithms don’t ruminate. They liquidate stocks that miss earnings completely and immediately until the position reads zero.

My vibe

Big Balls, the notorious Musk protégé, was badly beaten by a gang of kids carjacking his girlfriend in DC yesterday. This happened to my daughter when she was working as a staffer on the Hill for Rodney Frelinghuysen in 2017.

They stole her purse and the police were able to locate her phone and the exact address in the city. However, they refused to retrieve it because…… “It’s too dangerous to go there,” they said. “A phone is not worth it.” No arrests were made.

Better than open carry… malinois pups

beautiful

night all…good luck in Asia

JJ

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