Round 1
market vibes
“Tariffs are a tax.” Rand Paul.
In the news
Bloomberg 5:10 AM EDT: “China vowed to fight the trade war “to the end” and took steps to prop up its markets. The PBOC eased yuan controls signaling tolerance for currency depreciation while a group of state-linked funds scooped up equities.”
Tariffs are bad some say, because they are protectionist; an economic posture everyone agrees is wrong. Ronald Reagan spoke eloquently on the subject in the 80s. The US Chinese embassy posted a clip of his speech on X yesterday, to which I replied.
In other tariff news… Trump to Ursula: “Pound salt.”
In the markets
Daily volumes haven’t been extreme in stock indexes, but the combined 3 days of selling since the tariff announcement is a huge amount of turnover. Open interest leapt higher during the Wednesday-Monday flush, indicating longs this morning are in tentative control. There is a textbook isolated low that would require a catastrophically bearish surprise to exceed, in my opinion. That doesn’t mean we’re going straight up but any retesting of yesterdy’s lower range should hold.
I am not a fan of buying into the sell void ( noted chart below) yet, but depending on the rest of the month and tariffs and Russia and Iran, which are softening day by day, equities could easily reestablish higher ranges. Back to BTFD, imo. Stay off the right-hand side.
The Shanghai gold premium ripped higher on Friday. I heard it was $33 ish last night. “It does not do to leave a live dragon out of your calculations if you live near him.” Gandalf the Grey
Technically, gold is still a follower in NY. We are the custodians of millions of ounces, but Americans still shun the relic. I think gold is very overvalued relative to oil and other metals, but that’s a sideshow, now.
If China hits the eject button on Yuan, gold is going to flow to China and Asia again. I’m not thinking a few weeks, more like months or more. They have stated their case. “Yield to our demands, or we will sell US Ts, debase the currency, and buy gold.” Round 1 is about to begin
Next up this morning: Silver continues to stay obviously short. Oil is developing nicely below a sell void. Bonds may give us another shot at great location on the long side… plus, more on the new world order in the vibe… here we go.
