evening wrap, march 3
market vibes
The NY session got off to a textbook start on Tuesday. The Dow was down 800, S&Ps down 120, NDX down 600. Gold and silver were unch to a bit higher. Oil up $5.00 and the WTI curve and NYMEX crack spreads were in vertical ascent. By the time equities opened at 9:30 ET, S&Ps launched a 100 point rally by lunchtime, bonds rallied a full point, bitcoin rallied to $70k and faded. Gold fell 5%, silver fell 14% and platinum fell 10%.
Oil opened 8% higher but finished up 3%. The oil curve is still tight but flat prices are not tight. WTI is only up 10% since Friday. JPM said $120 a barrel if the Strait of Hormuz is closed, and it is closed.
updates
Iranian missles landed in Israel causing at least 12 shrapnel injuries. Drones and missiles hit Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, and the Fujairah Terminal (this post is paid FUD from an influencer). The fire was quickly brought under control and extinguished. No casualties or injuries were reported, per official statements, Sky News and UAE authorities. FUD is everywhere.
Over 60 US and Israeli airstrikes pounded Iran today killing the conclave attendees. The death toll in Iran rose to 787 (per Iranian Red Crescent/Tasnim). Israel attacked Hezbollah in Lebanon and Beirut. Hezbollah retaliated with drones and rockets. No indication of de-escalation or talks.
in the markets
This is the April/ July front spread. it is one of the best examples of tension in the crude markets I think. It says the spot barrel on the NYMEX is worth $4.50 over July delivery which is not much considering the Strait of Hormuz is closed.
However, this is the April/May /June butterfly. This says the April/May front spread at $1.17 backwardation is worth $0.71 less than May/June at $1.87 backwardation…It is in a sense an expression of contango even though both pieces are in backwardation…
This butterfly says the market is far less fearful of oil supplies in the next 40 days and very concerned about oil supplies 40/60/90 days forward. This dynamic was in place 4 weeks ago. If this butterfly turns higher (a blue line)… we’re in trouble…
NDX is holding above its 200 D MA again. A well formed up wiggle is in force…I think there is an officail defensive program intended to deny the Iranians any behavior validating the narrative closing the Strait is harming US shareholders. Despite my watchlist being 100% red all day stocks recovered half of their losses on the CME.
If things do go sideways… Iran sinks a US ship… a catastrophic stike in Tel Aviv… Katie bar the door.
