the worm turns

market vibes

September 17…)

“I didn't realize it was September until I saw the Chicago Cubs choking.” Jay Leno

Housing data this morning at 8:30. Elevated interest rates have taken a toll on Building Permits (chart below) since the “restricive” FOMC policy began in 2022.

The DOE reports petroleum stats at 10:30. The API private surveys noted crude inventories fell 3.42 mm barrels (total 2025 inventories are up 5.3 mm barrels in 2025). Mogas fell 330k barrels and disty inventories were up 1.9 mm barrels. We have plenty of gasoline. Notional heating oil cracks are almost double RBOB on the exchange so turnarounds should rebalance that. The SPR added 500k barrels totaling 405 mm barrels now. I see zero stress in US inventories either way.

In the news

Kash Patel spent four and a half chaotic hours before the Senate Judiciary Committee yesterday, pretty wild stuff especially with Adam Schiff. When asked if there are more people under investigation related to the assassination of Kirk, Patel said yes. From what I’ve seen and read, we’re a long way from the truth and a number of footsteps are leading offshore. .

Trump had a “wonderful” call with Modi and they agreed to work together to end the war in Ukraine. China banned domestic tech companies from buying NVIDIA chips, according to FT the stock is lower this morning. And … It is “shut down” time for funding the government again!

In baseball for all the Canadian readers, the Jays are 6 games ahead of NY and 99% to clinch with 11 days left in the season.

In the markets

Gold is down on profit taking overnight but seems steady. By my thumbnail, I think there’s about 50k lots (5 mm toz) of risk-on length that came into gold in NY from Powell’s Jackson Hole concession to a .25 cut on August 22. My best estimate for the average entry price is the old highs at $3585.00.

If we get under $3585.00, gold could be in trouble or if there’s responsive buying into long liquidation, a high volume rejection and rally… that would be positive. I don’t expect anything like that today but it’s good to review the road behind us.

Everything is high. And so much is riding on a tiny fraction of a point that’s been fully discounted for nearly a month. I’d be inclined to buy gold at $3585 but that’s easy to say when it’s trading $3700.00.

There really is no position at risk in Comex silver, I think. There is 19 billion USD in SLV as of August 31, which is the equivalent of 90k Comex lots or 56% of Comex open interest. The highs for SLV AUM were ca 30 billion in 2011.

However, Comex silver is a flat price market and it’s likely a good part of Comex OI is facing SLV. My point is silver is not excessively long. Doesn’t mean it can’t go down but both gold and silver remain historically uncrowded, even at these prices, in my opinion.

Copper has given back half its gains and Comex open interest is up 30,000 lots. We’ll see what happens but it’s not healthy to see that much length lose that much P&L on a rate cut.

S&Ps have added an additional 20% of open interest (400,000 lots) in the last 9 sessions since Sept 5. That’s a lot of OI to spend for 150 S&P handles; a very big bet. We’ll see if it pays off.

In other markets, oil is lower. I don’t expect oil to move on the FOMC unless it’s a .50 cut, which could be bullish. Bitcoin is down a few hundred bucks. The dollar is up a few ticks. The long bond is making new highs, probably on Miran’s 3rd mandate narrative.

my vibe

Everything looks pretty normal. It feels like we’re sitting in a good restaurant waiting for the food to arrive, which should be cooked and served with a smile. The check might be a little pricey but that’s what you get when you dine (on the highs) uptown.

New highs in stocks will probably get sold. There’s a lot of length across the board. Dips in gold and silver should see responsive buying. I don’t expect Powell to be snarky or pouty. He’s the Chair and he’s going to be the Chair until next May. The last thing he wants is to die on a mole hill here in September. The next two weeks should be more active, I hope.

Stay flexible, look for an edge in coming days and don’t hesitate to take it (with a stop, of course). Keep in mind there’s a lot more cuts coming, although Powell won’t say that in so many words, the data does.

If dogs could talk

good luck today

JJ

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