evening wrap, may 14
market vibes
Items of note from Thursday in China:
Both sides agreed the Strait of Hormuz must remain open. Trump said Xi offered to help with Iran negotiations and Xi committed not to provide military equipment to Iran. Both leaders said that Iran cannot have a nuclear weapon. Taiwan was mentioned and tabled.
Xi is opposed to Iran’s tolling of the strait and agreed to buy more U.S. energy to diversify away from it. Scott Bessent said Alaskan oil is a “natural” fit for China in comments after the meeting.
Before we get into the charts tonight let’s take a look at what Jay Powell is handing off to Kevin Warsh tomorrow.
Net speculative shorts in Treasuries:
Are at or near all-time highs. Here is the complete breakdown of Leveraged Funds (speculative / managed-money / hedge-fund) net short positions from the most recent CFTC TFF Futures-Only report as of Tuesday, May 5. These are among the largest bearish Treasury futures positions ever recorded.
Net speculative longs in oil futures:
As of the May 5 COT report (updated tomorrow), speculators are holding 730,000 lots of combined net long WTI, Brent, RBOB, heating oil and gasoil futures. Not quite a record but almost.
Stock market breadth:
At or near record lows. Only 22% of S&P 500 stocks have outperformed the index over the past 30 days… the third-lowest reading since 1996. The rally remains extremely narrow (tech/AI concentration), with weak participation from the broader market. On Wednesday 350 of 500 S&P issues were down as the index made record highs (Z Hedge). Rule of 20: Currently circa 32 (S&P 500 trailing P/E around 26/27 + inflation component). Fair-value is supposed to be 20. This is one of the highest readings in years.
money supply
In December 2025, the FOMC stopped QT and started buying 40 billion T bills per month which cumulatively has flooded the system with liquidity. This keeps funding costs low for Treasury shorts (5% negative carry) and keeps AUM flowing into risk assets like oil and AI stocks. Warsh notoriously hates bloated balance sheets and he’s going to walk into the exact setup he’s spent years trying to stop. More on this in the vibe.
in the markets
Silver had a 6 dollar range closing near its lows just above the top of the major compression POC I noted this morning. Prices are about $2.00 above fair value tonight.
