evening wrap, may 20

market vibes

“There’s nothing quite as still as a stopped clock.” John Wrench of Chester, 1690

Precious metals took centerstage in NY today, led by platinum. NYMEX WTI traded either side of unchanged in a choppy affair and thin volumes. Government Yields climbed in the US and Japan and stocks traded sideways in light volume (of course) which wasn’t easily distinguished from an up day recently. Bitcoin might have been a precious metal, mirroring its occasional kinship with gold, tenaciously challenging its highs.

News items were predictable anti-peace Bloomberg war FUD, multiple versions of rate cut Fed speak, an unexpected extension for CVX to continue operating in Venezuela for another 60 days, a hefty quake hit Papua New Guinea. Elon

Elon Musk spoke remotely at an economic conference in Qatar which a typical CNN interview with snarky Sky News(ish) interviewer. Despite that, Musk acquitted himself with sensible dignity.

In the markets

One of the most impressive rallies in platinum in quite a while. The catalyst is China’s increasing appetite for gold, now possibly migrating to what has been a forgotten favorite of Hong Kong jewelers for many years. There have been false starts in XPT, a lot of them, but none has had as credible a narrative as this one, including Chinese investors looking for a cheaper alternative to gold.

NYMEX volume was the highest since the April 7 lows, a fitting symmetry. I noted the stoch accelerating in hopes it follows through! Open interest was near its long term lows this morning. I will update it tomorrow.

Gold rallied a respectable $50/toz on reports that china imported year-over-year increases in both gold and platinum for the month of April. Technically, gold now has a durable range between $3100 and $3500. There is a minor point of control (POC) at $3325, noted in the next chart, which looks doable on this rally.

Prices are a bit higher since I printed this compression profile, but the little red dot at the arrow saying, “we are here,” indicates prices are through the inflection between $3240 (the dominant point of control) and $3325 (minor point of control), and markets do have a memory for high-liquidity prices. I won’t be surprised to see gold above $3325, perhaps this week.

In other markets

S&Ps traded defensively for the entire session and the index was down 55 handles around 3 PM. By the close stocks ahd recovered about half of the day losses. Volumes were as low as they have been this year. There are no outstanding narratives to lean on other than AI is amazing. The rest of the asset class lives and dies in the shadow of it.

Silver was up $0.66 on light volume and stayed within its recent range. I didn’t see any other metals or commodity news. WTI was unchanged to a few ticks higher. The dollar was a few ticks lower vs. all its major currency pairs.

my vibe

I’m not sure how we’ll sort out the social implications of AI. I see robots everywhere now, and we live in a world of electric creatures we can’t see or hear… but they are so very much a part of life in the markets. I hope we don’t obsolesce ourselves in favor of robotic immortality. Although the poet did say a whimper not a bang. At any rate…

What seems obvious to me is the commodity markets are far far behind the stock market’s valuations for AI. Commodities, especially metals like copper and platinum are priced lower than when we were listening to iPods. Seriously.

Here’s a 20 minute clip with Eric Schmidt saying “think cities per data center” and more, just to get a sense of the power we’ll need.

If you have time… I could watch this clip for hours

Night all… good luck in Asia!

JJ

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Charts and data CQG and Bloomberg

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