how rude

market vibes

May 6…)

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." Wilkins Micawber 1849

The trade balance is expected to rise $15 billion in March due to frontloaded inventory before the April 2 "Liberation Day." Day 1 of the FOMC.

In the news

The German establishment CDU/CSU coalition failed to get a majority in an initial vote in the lower house of parliament, necessary to confirm Friedrich Merz as Germany's next chancellor. The press calls it a "shocking setback." The gray line in steep decline is the establishment, and the blue line in accelerating ascent is the AfD

Similarly, the Alliance for the Union of Romanians (AUR), a right-wing party much like the AfD, won a plurality of votes in the Romanian presidential election on May 4 with approximately 40–41% of the vote (BBG). A runoff will be held on May 18.

In local news, Trump blocked research funding for Harvard yesterday by formally freezing all future federal grants. So far, he has frozen $2.3 billion of federal funding, and $9 billion of federal funding is under review, as well as Harvard's tax-exempt status.

This is an interesting conflict, not only because Harvard is a quasi-hedge fund managing $50 billion, but the entire system of American education in 2025 is in question, from the catastrophic failure of public schools to the extraordinary power and wealth of institutions like Harvard. And $1.7 trillion of student debt, of which up to 45% is non-performing (Grok 3).

In financial news, stocks are higher in Hong Kong on improving tariff negotiations and lower in New York on deteriorating tariff negotiations, as per MSM.

In the markets

New York joins the overnight rally in gold on typically muted technical development. However, Comex overnight volumes are already higher than the full session on April 15, implying a high-volume directional move on the SGE and London this morning.

I think gold was poised for a correction on Friday afternoon, but the dollar's unexpected crash in Taiwan ulcerated a healing sense of distrust for Trump and America in China.

I'm not going to guess this one. Gold could go to new highs, or the range may have a lower boundary if a pause is still in the cards. I do think gold is looking for a range, but the top of it may be higher than $3,500 or the low may be higher than $3200.

In oil this morning, prices continue to trade horizontally at the bottom of the recent range on light volume and a modest increase in open interest. “Diamondback, the largest independent oil producer in the Permian Basin, says production has likely peaked in America's prolific shale fields and will decline in the months ahead after crude prices plummet." That may be true; however, the global industry, including U.S. majors, is planning to increase production. And there is LNG that few seems to keep on the radar.

WTI posted the lowest close in four years yesterday.

Although COT net spec length in WTI is historically low, it has doubled in April as of Friday's latest report.

The New York equity session portends to be another day of robotic price-fixing, although volume on the overnight dip has been relatively busy.

Wells Fargo insists the S&P will trade at 7,000 because they are betting the Fed will cut rates and a robust macroeconomic environment (Yahoo). I wonder what that will do to JPY or CNH… or gold? In other words, Wells is all in for Trump.

In other markets, nothing is happening in fixed income or FX. Silver is maintaining its role as a non-player character. Copper and platinum, same. Bitcoin is clinging to the lows of its recent range. No narratives, no news, no pulse in crypto or metals, even gold. Actually … barely a heartbeat in anything.

my vibe

The hard part of having these transparent FOMC meetings is they long ago laid bare the impotence of the Fed to do anything except adjust an insignificant rate up or down 0.25 bps and talk about it for a few minutes after they don't do anything… because they can't. Powell will not cut rates into a dollar crash in Asia.

There were a few days of deceleration last week when it felt like a lull was imminent, but this Taiwan thing was incredibly rude. So, what will Powell say that might be good for our markets and the nation? Not much. He has said often the fiscal side of our travails is the unsustainable issue, and he can't or won't address it. The Fed is actually limited to "break the glass" emergencies when JPM et al. say so. I have a hunch Powell and his team are ready for one, but that is it, folks.

Fed Funds upper bound is 4.50% this morning; the two-year note is 3.80%. I could be wrong, but that looks like inversion. I can't recall the last time I heard or read the word inflation except the president complaining there isn't any.

Because it’s there (scroll the thread)

Where is Romania

Oscar and Johnny

Good luck today

JJ

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