evening wrap, september 3

market vibes

“The world is facing a choice of “peace or war.” Xi Jinping today in China.

I wrote most of this at 4:25 PM. Had to run out for a couple of hours… finishing BTC and the vibe now…8:15 PM

Google got a favorable ruling from the courts this morning and added 8% to its share price on the 9:30 opening. NDX traded 300 higher forthwith, S&Ps rallied 30 higher, and the Dow, which had been down 150 overnight, made it back to unchanged. After that, it was pretty much over for stocks until the proverbial last half hour (chart below).

The Dow went down 280, S&Ps lost all but 5 points of their early gains, and the NDX fell 250. GOOG, however, never lost a penny from its opening lows. The usual suspects saved up their ammo for the last 30 minutes and did a splendid job of jacking the close.

It’s important to remember AI algos do not manipulate prices. They are written to manipulate your mind, just like Marshall McLuhan’s “The medium is the message.” If you buy stocks, you will be rewarded. If you sell them, you will be punished. That is why the only thing that matters is the settlement. Allow me to refer you to “The Social Dilemma” on Netflix!

S&Ps 5 minute data…

Gold had an excellent day until the pit close, which is the PnL benchmark for prop trading and bank settlements. Someone obviously cashed out of some size this afternoon. So now the market has a large position at a small loss going into Asia. It might very well have been someone in HK or Shanghai selling. Whoever has it is almost certainly going to look to get out of it.

Big picture, gold is out of the range and about 1% over its previous contract highs. I plan to focus on that until it fails.

Silver seems steady but these metals are the enemy of the stock market. If you’re long gold and silver, you’re on the B team, so don’t get too comfy. I think gold and silver could be at the beginning of something bigger, but I always have a stop.

Oil fell $1.73 in a $2.00 range, which was an inside day after yesterday’s $2.00 rally in a $2.37 range. This a good example of how skittish the oil markets are. There was no hard news, but Reuters said OPEC was considering another hike in quotas. Front spreads were weak again. OPEC meets on Sunday.

I’m starting to think wherever NDX goes, Bitcoin goes. I’m not sure how I feel about either Bitcoin or NDX, but I think they’re both puppets. Back in the early days of IBIT, there were real AUM flows to trade, just like the rally in stocks in Q2 were real flows… OI and volumes are so low now the puppeteers are the flows.

If they change their minds and turn on the markets they won’t tell you, they will sell it you.

My vibe

I’m sure everyone has seen the clips of Modi with Putin holding hands and hugging, and Xi hosting Putin in Beijing. The military parade was reminiscent of the 1936 Olympic Games in Berlin. Not that I think Xi is Hitler. I don’t. I do think he possesses the same asymmetry of conventional power that Hitler did, notwithstanding nuclear power.

Modi and Xi’s reception of Putin spoke volumes. Not with hugs or platitudes but hard cash. India is loyally buying Russian crude in the face of U.S. sanctions. Xi’s energy team signed an MOU with Gazprom to build a second larger nat gas pipeline.

Zelenskyy’s Ukraine has the UK, France, and Germany, roughly 10 trillion in GDP and 200 million people, plus a few nukes and maybe a handful of soldiers. Putin’s Russia has India and China, 3 billion people (40% of the planet), 25 trillion in GDP, and many millions of battle ready soldiers and two hyper productive military economies. North Korea’s attendance in Beijing and Kim’s loyalties to Russia on the front lines of battle were equally plain.

Trump is charging the E-3 for weapons, payment vs delivery to Germany.

Neutrality in a standoff is doable. As Trump said in early August, “Let them fight it out.” Neutrality is impossible in a period of escalation. China and Modi have chosen, in my opinion. A conference call is planned for tomorrow, September 4, with Starmer, Macron, Merz, Meloni, Zelenskyy, and Trump. Trump said he’d be speaking to Putin in a couple of days.

Let’s hope for the best

been listening to a lot of paul simon lately

doux rêves (sweet dreams)

JJ

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Charts and data CQG and Bloomberg

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