April 2025 DDD

[ducati916]

And so now, the US is on the clock: stocks down big means US consumer spending will be down soon. Which means US Federal receipts will begin falling soon. Tariffs up in theory raise revenue for the US government but only if:

1. US trade partners (China) pay the tariffs effectively and;
2. The USD rises to offset tariff-related inflation.

The problem is that thus far, China is not reacting as they did in 2018.

So tariffs are increasingly looking likely to be either or both an inflationary tax on consumers (stagflationary) or a pinch on corporate profits, leading to higher US unemployment, lower receipts and likely a US recession which typically sends deficits up 600-800 bps of GDP, or $1.6-2.2 trillion.

And so the US government is now in a race between the negative hit of all of the above against the ability to reshore and rebuild as fast as possible, with the blow maybe softened somewhat by tariffs.






So yields are currently falling driven by the run-to-safety trade that has always operated in the past during equity market sell-offs.


But the USD



Makes imports more expensive and then add the tariff effect to that also.

Inflation is, will be, higher. Thereby making UST yields incompatible with selling new debt, unless the Fed steps in to buy it.

So oil:



Full:https://www.reuters.com/markets/com...new-challenges-top-oilfield-flags-2025-03-27/

The global shale market and economy cannot survive oil <$65 for long.

The UST market and global bond market cannot survive oil >$85 for long

So oil will have to be kept $65-85 range.

Gold will have to be allowed to be the release valve.

Since gold isn’t used for anything.

The gold/oil ratio, which just broke out is likely going to triple digits in coming years. Mostly via higher gold prices.



Oil News:

Friday, April 4th, 2025

The combined effect of Donald Trump’s import tariffs, OPEC+’s inopportune decision to speed up the unwinding of production cuts and China’s retaliatory actions have wiped off $10 per barrel from global oil prices, with ICE Brent falling below $65 per barrel for the first time since August 2021. Seeing backwardation barely change compared to the beginning of the week, one could assume that US tariffs are the defining factor for the price change, nevertheless this week will not go down well in the history of oil markets.

OPEC+ Rushes to Unwind Production Cuts. Eight OPEC+ countries that have been moving along with the gradual return of their 2.2 million b/d voluntary cuts unexpectedly agreed to expedite the unwinding of production cuts, boosting output in May by 411,000 b/d, equivalent to three monthly increases.

Trump Surprise Moves Squashes Metal Arbitrage. Whilst many traders expected Donald Trump’s import tariff roll-out to impact metal markets, the non-sanctioning of metals led to shrinking spreads between US and European benchmarks, with Comex gold premia over London futures halving to just $20 per ounce.

China Strikes Back with 34% Tariff Move. Reacting to President Trump’s sweeping tariffs, the Chinese Finance Ministry announced that it would impose additional tariffs of 34% on all goods produced in the US from April 10, concurrently adding seven rare earth minerals to Beijing’s export controls list.

Canada’s TMX Downgrades Export Outlook. Canada’s Trans Mountain pipeline has downgraded its outlook for 2026-2028, pushing out full utilization beyond 2028 with an expectation of 84% throughput this year, largely due to lower-than-expected spot bookings in TMX, a mere 18,500 b/d so far.

Nigeria Picks Shell Executive for Top Oil Post. Nigeria’s President Bola Tinubu appointed Bashir Bayo Ojulari, formerly the country manager of Shell’s (LON:SHEL)operations, as the top executive of the country’s national oil firm NNPC, just weeks before NNPC’s long-anticipated IPO.

Activist Investor Buys Up BP, Shorts Shell. US activist hedge fund Elliott Management, concurrently to its reforming drive in embattled oil major BP (NYSE:BP),has built up a huge short position in BP’s competitor Shell (LON:SHEL), equivalent to about 0.5% of Shell’s total worth.

IMF Warns of Global Tariff Fallout. The International Monetary Fund warned that US import tariffs and reciprocal measures triggered by them pose a ‘significant risk’ to the health of the global economy, potentially indicating that its 3.3% global GDP growth forecast for 2025-2026 could be soon cut lower.

World’s Top Miner Mulls Coal Spin-Off. Australia’s mining giant BHP (ASX:BHP) has reportedly considered spinning off its iron ore and coal divisions, similar to its previous listing of South32 in 2015, however, the company’s top management as iron ore still accounts for roughly 60% of its profits.

Agricultural Staples Fall Under Trade War Pressure. China’s reciprocal tariffs on the US have triggered a collapse in Chicago wheat and soybean futures as the tariff war puts US exporters at a disadvantage to Brazil, with both commodities set for their biggest weekly drop since November 2024.

Colombia Overcomes Indigenous Oil Riots. Ecopetrol (NYSE:EC), the national oil firm of Colombia, resumed operations at its Rubiales and Cano Sur oil fields, producing 140,000 b/d or 18% of the country’s total output, after a deal with Indigenous associations after weeks of riots that debilitated operations.

Iraq Doesn’t Want To Give Up on Kurdistan. The Iraqi Oil Ministry has reactivatedefforts to find a negotiated settlement with the semi-autonomous region of Kurdistan to resume oil exports from the north of the country, previously failing to convince Erbil that $16 per barrel would be an adequate price.

Kazakhstan Reports Giant Rare Earth Discovery. Kazakhstan’s Industry Ministry announced the discovery of a rare earth metal deposit with an estimated resource tally of more than 20 million tonnes in the region of Karaganda, placing it behind only China and Brazil in terms of prospective resources.

European Gas Stocks Plunge to Three-Year Lows. Natural gas stocks held in EU jurisdictions entered the summer period at their lowest in three years, totalling only 388 TWh of 34% of nameplate storage capacity, aggravated by a speeding up in net withdrawals to 1.02 TWh/d in the second half of March.

Ukraine war:





From NYT:

The Secret History of the War in Ukraine

This is the untold story of America’s hidden role in Ukrainian military operations against Russia’s invading armies.

www.nytimes.com

"The US cannot credibly project conventional power against a near-peer or peer power to stop them from making changes to the global Rules Based Global Order. without taking politically-unacceptable levels of US casualties and Russia and China both know this. So systemic change to the 'Rules Based Global Order' is likely to continue at an accelerating pace."

So forcing Russia and China to term out future UST issues is not going to happen. Forcing China to unilaterally accept tariffs is not going to happen.


Trading this week:

• Today was even worse than yesterday, with the S&P 500 dropping nearly -6%. The index has shed -10.5% over the past two sessions, marking its worst back-to-back decline since March 2020.
  
• Dean points out that declines of this magnitude are extremely rare within two months of a record high. This has only been observed during some of the worst stock market crashes in history, including 1929, 1987, and 2020.
  
• It would be foolish to draw a bold conclusion from a sample size of three. That said, $SPX has historically struggled over the next week, but six-month returns have never been negative.
  

The Takeaway: The S&P 500 tumbled -10.5% in the final two days of the week. Declines of this magnitude are extremely rare within two months of an all-time. This has only been observed during some of the worst stock market crashes in history, including 1929, 1987, and 2020.



The above chart is uncanny.


Fundamentally, yes stocks could fall a whole lot more quite easily. The main reason being that Trump in his many policy releases has targeted the capital flows as being an issue in the deficits. Markets have lost +/- $2 trillion in market cap. this week out of a $21 trillion foreign capital flow. Lots to go.

The Fed is sitting on its hands. Largely because things are likely to become significantly worse on the inflation and employment fronts and that will be soon. The ISM manufacturing data was horrible.

I have to say as 'tops' go, this has been a really fast one and hard to navigate. Being constantly hedged has been very rewarding this last couple of weeks.


Anyway, over the next few weeks my day job workload is lighter, so I will be able to update more regularly again.


jog on
duc

 

[divs4ever]

China Strikes Back with 34% Tariff Move. Reacting to President Trump’s sweeping tariffs, the Chinese Finance Ministry announced that it would impose additional tariffs of 34% on all goods produced in the US from April 10, concurrently adding seven rare earth minerals to Beijing’s export controls list.

that is NOT panicking that is matching the tariffs and then raising the stakes a little , i would have gone for targeted pharmaceutical ingredients instead of critical minerals but then maybe China is trying to slow military production as a side-effect .

( i can see this and am rubbish at poker )

now i would have thought China just expand it's sales wider internationally and take activity from the US dollar ( less sales to the US ) , lulling the US into overreaching

maybe they are trying to antagonize the US into a public blunder ( retaliate even harder ) i wonder if China is rolling out of bonds into physical gold ( and silver/copper ) during all this

copper will be important soon but ( allegedly ) China already has huge stockpiles of bar-stock

... dominate the world copper trade , perhaps ?

 

[divs4ever]

So forcing Russia and China to term out future UST issues is not going to happen.

if Russia still holds any treasuries at all more fool them , buy more even dumber there will be a new President in 4 years time , and that one could even be worse

and i would think China will be ( mostly ) letting existing US bond holdings mature ( they hold a heap of Muni bonds as well ) but will China buy more in the future ?

given the current rhetoric i suspect not , maybe they will convert any trade surplus cash , into physical commodities ( corn , oil , gold , etc etc ) and bring it back to China ... or just sell very little to the US ( and stop buying stuff as well )

they had a 'Bamboo Curtain ' decades back they might decide to do that again and force all buys and sells through intermediaries , like Singapore or India ( to G7 nations )

 

[qldfrog]

The Australian dollar actually fell hard last night which was not what i expected

 

[ducati916]

I think this chap was posting these as: don't worry all will work out fine.










The number 1 purpose of Tariffs is to end globalisation and return manufacturing to the US.



The second goal of tariffs is to impose taxes on corporate profits if companies decide to import, which forces companies to pay taxes that they might otherwise have dodged, such as Big Pharma and Big Tech that run their profits through Ireland and other financial centers and pay zero income taxes in the US on those profits sheltered overseas. Trump explained that yesterday, which may be why Apple tanked 9% today.

Tariffs are bad for stocks because they’re tax on corporate profit margins.

We know that, based on how stocks got hit in 2018 through the tariffs finally imposed then, and the S&P 500 went down 20%.

Tariffs are bad for stocks because they extract taxes from companies, many of which would otherwise not pay income taxes in the US. Hence lower stock prices. The market understands that now just fine, despite the relentless BS in the media that tariffs are sales tax for consumers.

Passing on higher costs to consumers is very hard. It tends to cause sales to plunge, as Americans hate higher prices. And then, with sales dropping, the price increases are rolled back.

So we have a sea change.

Does a sea change mean that the previously identified 8 charts have anything to do with the current chart?

Now add in the issue around the deficits.

What was the deficit in 1987? In 2000?

In fact as the 2000 chart reached its former high, we then went into 2008. On a macro basis, why was that? The year 2000 is when China joined the WTO and US manufacturing was hollowed out creating the 'Rust Belt' and the NINJA mortgages started to appear (No Income, No Job, No Assets). Bernanke and the Fed were implicit.

Currently liquidity has been provided through any number of nefarious ploys. This is fast ending.

The choice is:

Asset prices crash a la 1929-1934 or
The Fed inflates providing the liquidity to bring the manufacturing base back to the US. VERY inflationary and not a quick fix.

Employment.

Deficits soar when unemployment increases. Nothing like a crash to ratchet up unemployment, with compressed margins and a need for capital spending.

The Fed are not coming to the party currently.

That means the risk of this spiralling out of control rises significantly.

Capital flows have also been targeted by the Trump administration. That is, take your money home. This = falling stock prices and a falling USD. Foreign investment = +/- $21 Trillion. Market is down +/- $2 Trillion.

Tariffs generally should drive a stronger USD. A too strong USD also causes sales of assets.

Oil.

The US Shale oil industry needs higher, not lower oil prices. Oil prices are falling precipitously. Too low for too long and production is shuttered. With shale, some of that never comes back.

Tell me again that your charts tell you the story and that the future will look just like the past.

The US is in decline. Like most Empires, it is past its sell-by-date. Rotten from within. Whether it can rise again remains to be seen. However that will not be an overnight thing.


jog on
duc

 

[ducati916]

So the US futures are bouncing all over the place.

The reason: short covering.

We are now in a bear market. Bounces at this point in time are short covering only. The value guys are nowhere near to buying this market or individual issues.

What Trump has just about succeeded in doing is triggering the recession that the Fed, Treasury, et al have been managing to delay for about 2yrs through tricky liquidity plays.

The employment data will start to reflect this reality.

The muted run-to-safety, ie. longer dated duration, is because the savvy know that the only way out of this mess is outright monetization by the Fed of the deficits which will explode higher once employment collapses.

This is not your covid crash nor any crash that anyone alive has seen.

This is a 1930's crash until the Fed steps in to buy everything. The longer they wait, the worse it gets. The sign will be UST paper breaking and the run-to-safety trade also collapsing. Just to be clear, that does not mean cutting back to ZIRP, it means the Fed capping rates a la 1949 and buying everything.

Obviously the USD collapses as inflation takes hold.

To manage the +/- $220 Trillion in liabilities, more the $38 Trillion in public debt, look for a Gold revaluation. A revaluation will be supported by BRICS.

Bessent got the order wrong: first you restructure your debt, then and only then do you reshore. Trying to reshore prior to restructuring the debt is the mistake.

Trump should know better, after all he has been bankrupt at least 3 times.

Credit spreads will start to widen. That signals the start of the Treasury market breaking. That's where the Fed will become involved. No Treasury market, no floating US Treasury debt.

It's already happening:




The 160 level on $MOVE is when the sh*t really hits the fan.

I would say a week, but it may be faster than that.

As this is my 9'th or 10'th crash as measured by those previous charts, I would say we are just getting warmed up. The bounce 2 weeks ago was the clue. It was so weak that it could only be shorts taking profits.

If you remember 2020, Central Banks around the world became involved. Until AT LEAST that happens, this is a nothingburger.


jog on
duc

 

[ducati916]

Of course we have had a 3 day decline now.

Now the SPY closed underwater last Friday, which meant that it would always gap lower on Monday (today). When indices close underwater, gap down, almost invariably, they trade higher. It is a VERY bad sign if they then trade lower.




So sure enough, gap lower, trade higher.



However, we closed below the POC. (black horizontal line). Not a good sign. That is selling resistance. At the highs, there was little to no volume looking to get long.

This looks like a typical bear market short covering. Vicious upmove that found little to no new longs wanting to buy long. The late day rally failed at POC.




MAGS looking worse than non MAG7 stocks.

​ Today's Chart of the Day was shared by Ian McMillan (@the_chart_life). The Nasdaq 100 ($QQQ) closed slightly higher today by +0.2% after clawing back a -4.8% loss. Despite today's reversal, $QQQ remains -21.5% off its February peak on a closing basis. Ian pointed out that $QQQ found support at the prior cycle highs before rebounding today. $QQQ peaked at this level in Q4 2021 before entering into a multi-month bear market. Bull and bear markets are more subjective than the media's definition of a 20% advance or decline. However, if the Nasdaq loses its prior cycle highs, it will further confirm that a new bear market is underway. The Takeaway: The Nasdaq 100 ($QQQ) closed slightly higher today after successfully retesting its 2021 highs. If $QQQ loses this pivotal level, it will be further evidence that a new bear market has begun.

jog on
duc

 

[ducati916]

• The S&P 500 closed lower by -1.6% after being up more than +4.0%this morning. It's not bullish seeing bounces fade so quickly.
  
• As of today, only 12% of stocks in the S&P 1500 are above their 200-day moving averages, marking the lowest reading since Covid.
  
  
• While breadth is extremely weak, Alfonso points out that reclaiming the 15% threshold has historically been a solid buy signal.
  

The Takeaway: Breadth has reached washout levels, but the coast isn't clear until this indicator turns higher and reclaims 15%. Check out the full post for more on this signal.




Communicating.

Inverse bird.

Anyone feeling brave?

jog on
duc

 

[ducati916]

This is one for posterity!



jog on
duc

 

[qldfrog]

You have an early wake up..and refresh twice your yahoo finance key indexes page, 2 years of yearly TD returns overnight....

 

[peter2]

Impossible to swing trade in this type of on/off environment. So glad I wasn't short when the news hit.

 

[UMike]

"Anyone feeling brave?"

Yea but not brave enough in hindsight.

 

[qldfrog]

just added some bboz and bbus..the joy might be a bit too premature and excessive
Plus what else can you buy at a bargain on a day like that??

 

[peter2]

I'm interested in seeing Duc's posts on how the bond market forced Trump to delay the tariffs.
As for the query about market manipulation. There's no point asking. We know the answer.

 

[ducati916]

This drying-up of exported USD represents a threat to offshore borrowers owing $12.7T of USD denominated debt who will find it increasingly difficult to source USD to pay the interest and principle, precipitating a credit crisis and potentially a currency crisis.

Countries holding reserves in the form of USD denominated Treasuries and other credit instruments will forced to sell such instruments to provide local liquidity and paradoxically forcing US interest rates higher by doing so - just what is not wanted in the Fed’s credit bubble addicted US economy.

Since late Feb, a 19% decline on SPX drove a 19 bp decline on 10y UST yield. This is like pissing your pants to warm up in subzero weather; feels great for a little bit, but in a few hours you're dying of hypothermia. The debt needs to be devalued (restructured LOL).




150 is Bond market dysfunction.

Not that far away currently.

Credit Spreads:



Are showing signs of stress.



2001 was still deep in bear market territory. Bear markets are far more volatile than bull markets.



Another bear market statistic.

So I would not be calling this anything other than a short squeeze. None of the signs of a bear market bottom are present. Bear market squeezes (bounces) are vicious, which is why it is so hard to go short and more to the point stay short.

The Message of Gold:



When gold rises in the face of rising yields, that is a warning.

Also correlations within stocks must be pretty close to 1.0 That is also a hallmark of a bear market.

Oil News:

- Crude markets have experienced an unprecedented rout of investors as ICE Brent futures posted the highest ever daily traded volume on April 7, trading more than 3 million lots, more than triple the usual daily volume. - Further complicating matters, all regional oil benchmarks remain firmly backwardated with the Brent M1-M2 spread still trading around $0.50 per barrel, despite prices plunging some $10 per barrel in three days. - US investment firm revamped its near-term pricing forecasts and now expects Brent and WTI prices to be at $62 and $58 per barrel, respectively, by December 2025, only to lose further $7 per barrel next year. - Amidst industry calls to tame US tariff warfare, further downward corrections could be expected in 2025 demand numbers, with the EIA already delaying its monthly report to April 10, citing the need to re-run its models to account for a more hostile economic environment. Market Movers - Australia’s largest oil producer Woodside Energy (ASX:WDS) said it agreed to sell a 40% stake in its Driftwood LNG project in Louisiana to US infrastructure investor Stonepeak for $5.7 billion. - Top EV battery maker CATL (SHE:300750) is reportedly in talks to buy a controlling stake in the power unit of Chinese carmaker Nio (NYSE:NIO), seeking to expand into charging and battery swapping services. - Colombia’s state-controlled oil firm Ecopetrol (NYSE:EC) is considering buying the country’s largest independent oil producer SierraCol Energy, owned by private equity firm Carlyle Group, for some $1.5 billion. - Italy’s oil major ENI (BIT:ENI) disclosed that it is looking at further divestments of its upstream assets on the back of its $1.65 billion West Africa deal with global trading house Vitol. Tuesday, April 08, 2025 Battered by the market-wide sell-off, oil prices managed to halt their decline on Tuesday with ICE Brent recovering slightly to $65 per barrel. However, the US-China trade war could degenerate further with US President Trump threatening further tariffs on China, potentially negating and overwhelming whatever positive moves have been made vis-à-vis South Korea or Japan. Therefore, the short-term outlook remains bearish with investors wary of taking any new positions. Trump Vows to Lift China Tariffs Higher. US President Donald Trump announced that if Beijing does not withdraw its 34% import tariff on US goods, the White House will impose an additional 50% tariff on the Asian country with immediate effect from April 09, taking China’s tariff rate to 104%. Saudi Aramco Slashes Crude Prices. Amidst a worsening US-China trade war and continued OPEC+ unwinding, Saudi national oil company Saudi Aramco (TADAWUL:2222) has lowered its Asian formula prices for May-loading cargoes with an across-the-board cut of $2.30 per barrel. Sanctions Help to Improve OPEC+ Compliance. Declines in Iranian and Venezuelan oil production on the heels of tightening US sanctions led to a drop in OPEC oil production in March, with the oil group’s members pumping 26.63 million b/d last month, down 110,000 b/d vs February levels. London Mulls Oil Product Tariffs. The UK government, seeking to respond to US President Trump’s 10% import tariff on the country, is considering the inclusion of refined products in its retaliatory tariffs, sourcing a quarter of its diesel import requirements from the US Gulf Coast. US Gas Weighed Down by Tariff Woes. The May contract of US benchmark Henry Hub futures dipped to $3.74 per mmBtu, the lowest close in almost eight weeks, despite forecasts of colder weather coming across the States, mostly due to concerns of recession halting gas demand growth. Panama Canal Eyes a New LPG Pipeline. The Panama Canal Authority opened a bidding process for a new pipeline that could transport liquefied petroleum gas across the waterway, potentially speeding up deliveries of US propane to Japan and South Korea, a voyage that now takes up to 35 days. Libya to Offer PSAs in New Bidding Round. The government of Libya is offeringproduction sharing agreements to oil majors bidding into its first licensing round since 2008, offering higher returns to investors as the North African country seeks to boost production to 2 million b/d. Chevron to Rebuild the Louisiana Coast. US oil major Chevron (NYSE:CVX) was ordered to pay $740 million to restore damages caused by Texaco, a company it bought in 2001, to Louisiana’s coastal wetlands after it failed to clear, revegetate and detoxify its exploration sites. Canada Makes U-Turn on New Oil Projects. Since the departure of former Prime Minister Justin Trudeau, oil is back in vogue in Canada with opposition leader Pierre Poilievre vowing to accelerate the approval of 10 key energy projects, including Suncor Energy’s 300,000 b/d Base Plant mine. Copper Prices Collapse, Buyers Stock Up. In a rare occasion of extreme volatility, the plunging of copper prices below $8,500 per metric tonne in Monday early trading prompted Chinese buyers to maximize purchases, pushing the metal to a $1,000/mt rally in just two hours, the largest intraday move since 2009. Wary of US Tariffs, Mexico Wants to Frack. Importing some 6.5 BCf/d of US pipeline gas and poised to import more as legacy fields decline, Mexico has reached out to private investors to expand domestic fracking operations, a policy reversal compared to Lopez Obrador years. Gold Prices Recover Before Stock Market. Overcoming the past days’ market frenzy that triggered three consecutive daily declines, gold prices rose back above $3,000 per ounce on the back of a weakening US dollar and a worsening outlook on US-China tariff wars. Saudi Arabia Contracts US LNG Volumes. US LNG developer NextDecade signed an offtake agreement with Saudi Arabia’s national oil firm Saudi Aramco (TADAWUL:2222) to supply 1.2 million tonnes LNG per year from Train 4 of Rio Grande LNG, subject to a positive FID decision soon.

For another historical parallel, look at this chart, which has been updated from one Points of Return featured two days ago, after the S&P 500 had had one of the most variable days in history. The most similar day I could think of was Oct. 10, 2008, which turned out to mark the end of the vertical descent after Lehman. It was followed by a massive one-day rally, marked below. But that incident of an intense dose of volatility followed by a violent rally didn’t mean that the bottom, which wouldn’t come for another five months when the S&P hit 666, was anywhere close:


jog on
duc

 

[ducati916]

Long-term interest rates went up 20 basis points despite stocks going down. One potential reason for the move higher in rates is an unwind of the basis trade.

The basis is the difference in price between a Treasury security and a Treasury futures contract with similar characteristics.

The source of this price difference is demand and supply imbalances in Treasury markets, or arbitrage limitations for regulatory reasons.
In the basis trade, hedge funds put on leveraged bets, sometimes up to 100 times, with the goal of profiting from the convergence between the futures price and the bond price, as the futures contract approaches expiry.

How big is the basis trade? It is currently around $800 billion and an important part of the $2 trillion outstanding in prime brokerage balances. It will continue to expand as US government debt levels continue to grow, see charts below.

Why is this a problem? Because the cash-futures basis trade is a potential source of instability. In case of an exogenous shock, the highly leveraged long positions in cash Treasury securities by hedge funds are at risk of being rapidly unwound. Such an unwind would have to be absorbed, in the short run, by a broker-dealer that itself is capital-constrained. This could lead to a significant disruption in market functions of broker-dealer firms, such as providing liquidity to the secondary market for Treasuries and intermediating the market for repo borrowing and lending. For example, during Covid, the Fed was at the peak buying $100 billion in Treasuries every day.

In addition, if the supply of Treasuries grows further, for example, because of a growing budget deficit or the Fed doing quantitative tightening, it will potentially depress Treasury prices, hurting the long leg of the trade, and stress repo funding, as dealers have limited balance sheet capacity.

The bottom line is that the large and growing cash-futures basis trade, driven by leveraged hedge fund positions in Treasuries, poses a risk due to potential market disruptions and liquidity issues, especially in the event of an exogenous shock or increasing Treasury supply.
Sources: Commodity Futures Trading Comm, Bloomberg, Apollo Chief EconomistNote: The data are aggregated responses to SEC Form PF question 43. Only responses from Qualifying Hedge Funds are included. Sources: Data for the US Office of Financial Research, Apollo Chief Economist


jog on
duc

 

[qldfrog]

I think Peter will be satisfied

 

[divs4ever]

Another bear market statistic.

So I would not be calling this anything other than a short squeeze. None of the signs of a bear market bottom are present. Bear market squeezes (bounces) are vicious, which is why it is so hard to go short and more to the point stay short.

i see some commentators suggesting serious stress ( failure ) of over leveraged hedge funds ( and pension funds ) while other is suggesting more stress of Japanese investors .

a bottom ?

who knows there are so many big changes in sentiment recently basic trends ( lower highs, lower lows or higher highs , higher lows ) might be a useful guide

what might be catastrophic , would be trading with stop-losses preset

 

[ducati916]

President Trump's boosters hailed his decision to pause tariff increases for countries around the world as a strategic masterstroke, Axios' Marc Caputo reports.

• But few are buying the spin. Trump buckled under tremendous, mounting-by-the-minute pressure from CEOs ... friends ... GOP senators ... the markets ... and bond prices. Trump himself admits he blinked when "people were getting a little queasy" about the bond market.

Why it matters: Inside the White House, the episode highlighted the competing views and roles of Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick as they animated Trump's risky game with trade.

Inside the room: Both men were advising Trump in the Oval Office when he decided to post a message on Truth Social announcing the tariff pause for 90 days while the administration negotiated with as many as 75 countries.

• The stunning move, which rallied cratering markets globally, was based on three factors, according to three sources familiar with the meeting:

1. Panic: The real credit, "Trump's advisers admit privately, should go to the bond markets," the N.Y. Times reports. "Trump's decision was driven by fear that his tariffs gamble could quickly turn into a financial crisis. And unlike the two previous crashes of the past 20 years — the global financial crisis of 2008 and the pandemic of 2020 — this crisis would have been directly attributable to only one man."
2. Pressure: Trump was getting calls saying a real economic collapse was in the offing. CEOs were becoming increasingly vocal about their fears that tariff chaos could provoke a recession. And Republican senators expressed their fears directly to Trump — both during a group interview with Fox News' Sean Hannity on Tuesday night, and in a roughly hourlong phone conversation with Trump after the show, The Washington Post reports (gift link). Trump was already eyeing the bond market.
3. A Plan B: The president and his advisers also agreed that China's decision to raise tariffs on the U.S. created an opportunity for Trump to pause the tariff hikes on other countries as a token of friendship. It would be an effort to "put a ring around China, and isolate them," an administration official said

Recession not a depression: Trump "privately acknowledged that his trade policy could trigger a recession but said he wanted to be sure it didn't cause a depression," The Wall Street Journal reports in a front-page story with the print headline, "President Watched TV, Heard Dire Warnings, Then Gave In."

• Trump told advisers he was willing to take "pain," a person who spoke to him on Monday told The Journal.

​

Trump early this morning. Via Truth Social
Between the lines: In the back of advisers' minds was the way the tanking stock market shot up briefly on Monday after a false report that Trump was considering a 90-day pause.

• "I can assure you that was on people's minds in the administration, and certainly on the president's," a third administration official said.
• The sense of relief at Trump's announcement wasn't just visible in the stock market's jolt. It was palpable in the postures of Bessent and Lutnick, who quickly got in front of TV cameras and lavished praise on the president.

What's next: Led by Bessent and Lutnick, Trump's economic advisers will plunge into a country-by-country negotiation process that'll take months. They say all decisions will be teed up for Trump, who'll make the final call on each deal.

• "Instinctively, more than anything else," Trump told reporters when asked how he'll determine tariff exemptions. "You almost can't take a pencil to paper. It's really more of an instinct, I think, than anything else."

LOL.





Gold back to threatening ATH.


jog on
duc

 

[ducati916]

President Trump's whiplash tariffs may have inadvertently achieved his goal of reordering the global economy — by inspiring investors to sell U.S. assets and move their money elsewhere.

• Why it matters: For decades, the world has invested in America. Now, a global moment of clarity threatens to redirect trillions of dollars of capital inflows and diminish the U.S. in the international economic order.

The big picture: The U.S. receives nearly $2 trillion each year in foreign capital inflows.

• That includes investments in businesses and bank lending, as well as foreign investors buying U.S. stocks and bonds.
• America's share of global capital flows has nearly doubled from where it was just before the pandemic, to 41%.

Then came the tariffs.

• The U.S. dollar — which should strengthen in a tariff environment, all other things being equal — weakened steadily.
• "This suggests foreigners have been and are continuing to sell U.S. stocks and sending their money elsewhere," write Howard Ward and John Belton, co-chief investment officers of value at Gabelli Funds.

​

President Trump leads a Cabinet meeting at the White House yesterday. Photo: Nathan Howard/Reuters
The intrigue: A strong U.S. dollar has been orthodoxy for decades. Investors have counted on knowing the government would act to preserve the greenback as the world's reserve currency.

• But Stephen Miran, chair of Trump's Council of Economic Advisers, on Monday gave a speech in which he portrayed the strong dollar as fraught with downsides, denting U.S. competitiveness and labor.
• If the government isn't going to stand as firmly by the dollar, investors may reason it's a good time to look elsewhere, too.

Between the lines: The tariff blowback only accelerates a trend that started not long after Trump took office, with investors preferring foreign markets over the U.S.

• The S&P 500 is one of the world's worst-performing major indices so far this year.
• Asian and European shares rallied sharply yesterday — and U.S. stocks sank.

Reality check: For all the anxiety, the U.S. economy is still the world's largest and remains attractive to plenty of investors.

• Billions of dollars are still pouring into the U.S. to build new auto factories and data centers.

Bulletin: China today announced countermeasures by raising tariffs on U.S. goods from 84% to 125% starting Saturday. Get the latest.

Chinese President Xi Jinping has no shortage of pressure points to ensure Americans feel the pain from President Trump's superpower trade war, Axios' Dave Lawler writes.

• China has thus far imposed 84% tariffs in response to Trump's levies, which are now up to an eye-watering 145%. But ever since Trade War 1.0, Beijing has developed an array of tools that it's now putting to use.

Seven ways China can punch back as Trump continues to dial up the pressure:

1. Hit consumers in the wallet. China's factories produce the vast majority of the toys, cell phones and many other products Americans buy. From fast fashion to gaming consoles, things will get more expensive.
2. Punish farmers (and more). Any American whose livelihood depends on selling into the Chinese market is likely panicking right now — whether the product in question is oil, airplanes or soybeans (three of the top U.S. exports).
3. Target individual U.S. companies. China added twelve U.S. firms to an export control list this week — restricting what they can ship out of China — and added six defense tech and aviation firms to an "unreliable entity list" that bans them from doing business in China.
4. Cut off supplies of rare earth minerals. China last week further restricted exports of rare earths — a sector it dominates — in response to Trump's tariffs.
5. Selling U.S. debt. There's the "nuclear option" of dumping the $761 billion in U.S. bonds held by Beijing. This would likely ricochet back to hurt China.
6. Devaluing the yuan. Another potential economic lever is a sharp devaluation of China's currency, which would help boost China's exports and further diminish the ability of U.S. firms to compete in the Chinese market. For now, though, Beijing has indicated it wants to keep the yuan stable.
7. Freezing out Hollywood. China is a key market for U.S. films, sports leagues, and other entertainment products, and Beijing hasn't been shy about using that leverage.

Oil News:

Friday, April 11th, 2025

This week, one may not have noticed that oil markets are still backwardated and that refiners are still buying oil because the general sentiment in oil markets soured to its lowest level in years. Seemingly ceaseless salvos of incremental import tariffs between the US and China frightened the oil markets to such an extent that even Trump’s 90-day delay on implementation for everyone except Beijing failed to trigger any change, leaving ICE Brent stuck around $63 per barrel.

EIA Warns of 2025 Demand Slowdown. The US Energy Information Administration lowered its global demand forecast for this and next year, expecting consumption to rise by 900,000 b/d in 2025, whilst lowering its annual Brent forecast to 68 per barrel, some 6 per barrel lower than its previous forecast.

US-China Trade War Has No End. In an escalatory spiral of import tariffs, China’s decision to mirror Trump’s tariff hike and take its tariff on US goods to 84% led to the US President lifting tariffs to an unprecedented 145%, debilitating a $585 billion trading relationship and, in turn, triggering a 125% riposte from Beijing.

Keystone Flows Shut After Dakota Oil Spill. The 622,000 b/d Keystone pipeline carrying Canadian heavy crude all the way down to Cushing was shut down after an oil spill saw the release of almost 3,500 barrels of oil in North Dakota, restricting heavy sour crude deliveries to US Midwest refiners.

Kazakhstan Tries to Talk Sense to Oil Majors. Kazakhstan has reportedly initiated talks with oil companies operating in the country, seeking a coordinated production cut after Chevron’s Tengiz field expansion brought production to a record high of 2.18 million b/d in March in defiance of OPEC+ quotas.

Trump Launches New Shipbuilding Mandate. US President Donald Trump signed an executive order aimed at rejuvenating the United States’ shipbuilding industry, authorizing the USTR office to start levying multi-million port docking fees on Chinese-built or Chinese-flagged tankers.

Indonesia to Become a LNG Importer Soon. The Indonesian government is considering starting LNG imports as soon as the third quarter of 2025, eyeing a deal with the Trump administration on prospective imports of US LNG to meet a shortfall of 50 LNG cargoes amidst plunging domestic gas output.

Saudi Arabia Finds an Array of New Fields. Saudi Aramco (TADAWUL:2222), the national oil company of Saudi Arabia, announced the discovery of 14 oil and gas fields in the kingdom’s Eastern Region and the Empty Quarter, but with incremental flows totalling 8,126 b/d, the size of new finds disappointed.

EU Walks Back Steel Tariff Retaliation. The European Commission suspended its retaliatory 25% tariffs on $24 billion worth of agricultural and industrial goods for 90 days after US President Trump capped tariffs at 10%, failing to react to the US’ 25% levies on steel, aluminium, and car imports.

Russia Restores Full CPC Pipeline Flows. Following a Russian court ruling that ordered CPC terminal operations to resume in full after Moscow tried to pressurizeKazakhstan over its OPEC+ non-compliance, the 1.6 million b/d flows of mostly Kazakh light sour CPC Blend have been restored.

Iranian Oil Exports Boom On Sanction Fears. China’s imports of Iranian crude surged above 1.8 million b/d last month, marking an all-time high, as increased sanctions pressure prompted Shandong refiners to stock up with sanctioned barrels even though prices of Iranian Light are now on par with Brent.

Brazil Expedites Upstream Auctions. Brazil’s government has decided to organize an extra upstream licensing round as soon as September 2025 to boost revenue, offering uncontracted parts of giant producing offshore fields such as Tupi, Mero, and Atapu, whilst looking to raise $3.5 billion in revenue.

Oman to Host First High-Level US-Iran Talks. Adding to this week’s bearish sentiment, US special envoy Steve Witkoff is set to meet senior Iranian representatives for direct negotiations over Tehran’s nuclear programme, to be held in Oman this Saturday amidst a new round of sanctions on the Middle Eastern country.

China Stops Exporting Rare Earths. Outflows of seven rare earth materials placed on Beijing’s export control list have stopped completely, with regional sellers declaring force majeure on their long-term contracts as the likes of samarium, terbium, and yttrium are unlikely to be shipped to US firms.


Capitulation

“This market won’t bottom until we see capitulation.”​

You’ll see a lot of that in the coming days and weeks. I strongly agree and disagree with parts of that sentiment.​

Blackrock reported earnings this morning. Larry Fink said, “We have not seen any capitulation with any clients.” He’s not going to. If you’re looking for long-term investors to throw in the towel, you haven’t been paying attention.​

In the five days leading up to (and including) the massive rally on Thursday, $10 billion came into VOO, 4x the normal rate. Another $19 billion rushed into SPY.​

Eric Balchunas tweeted this astute observation on Thursday, when the S&P 500 had its 10th best day ever:​

Market timing will never die bc humans but man it took one on the chin today. I have to imagine a lot more ppl just joined Vanguard's 'not changing course regardless of what i see or hear' camp. COVID rally did same thing- which could be why the inflows seem to get stronger with each new crisis.​

Just keep buying isn’t just the name of Nick’s book; it’s become the mantra for millions of investors. In the United States, buying every dip has been rewarded for the last fifty years. It will take a long time for that muscle memory to fade. Don’t hold your breath.​

The Vanguardians of the Galaxy, as Balchunas calls them, will not be deterred. They will just keep buying, come hell or high water.​

But there is another group of dip buyers that does need to capitulate before we see a durable bottom. It’s the degens. They plowed $7 billion into levered long ETFs in the five days leading up to the tariff-pause. They need to chill.​

For seven straight weeks they’ve plowed money into ETFs that go up twice as much or more as their underlying holdings. How much longer will they continue to touch a burning stove?​

​

On the flip side, speculators are also plowing money into inverse ETFs, so the chart above only tells half the story.​

This next one from Warren Pies shows that 50% of all speculative ETF volume (inverse and levered long) has been in inverse ETFs. This chart is a week old, so I assume we’re way higher now. Warren says that readings of 60% have a perfect one-year forward track record. I’m guessing we’re already there.​

​

Know who’s not capitulating, ever? Dividend investors. Yeah, I get that they might not be the most tax-efficient way to generate income, but from a behavioral point of view, they’re great. Assuming the world doesn’t end, and the dividends keep hitting your account, investors focused on this strategy are more likely to stay the course when the volume goes to 11. We spoke about that, and all of the craziness of the past week, on the Compound & Friends with the great Jenny Harrington.​

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The US was the surplus country in last global trade war in the 1930s, while the UK, France, Germany, Austria, Russia were the deficit countries. That in the 1920s three of the five in Europe hyperinflated, while the UK & France significantly devalued their currencies. Then the US suffered a deflationary depression and ultimately won.

One of those countries was the global reserve currency at the time (UK).

Long-winded way of saying that Bessent’s platitudes, while confidently delivered, should not offer comfort.

Best case, this gets messy. The worst case? 10% of Eurasia’s 1913 population died in war from 1914-45.

In the end the Trump Administration will have to devalue the debt after an economic calamity; they will just likely have to do so at the time the market dictates it to them, rather than doing so first. Which would have allowed the Trump Administration to seized the initiative. The history books will likely record this as a badly-missed opportunity.

Gold will benefit going forward.


The first test may come in the late April Quarterly Refunding Announcement (QRA). If Bessent has to upsize UST issuance guidance for either cal-2q (unlikely given 2024 asset price boom) or more likely upsize cal-3q UST guidance (either outright, or via TGA drawdown) the Trump Administration will likely have an immediate credibility problem. This will manifest as stocks down, DXY down, 10y UST yields up, gold up.

Which is what we are already seeing. It can get a lot worse.

The Trump administration is trying to accomplish a number of very expensive undertakings using a blunt tool, tariffs. They want to:

1. Reshore manufacturing, which;
2. Will readjust capital flows and;
3. Conjointly address trade deficits.

The problem is that you cannot successfully accomplish these three goals while the debt remains as it is. The debt must be restructured first. Which means that the Fed must return to full blown QE or YCC (they are the same thing).

To date, Powell is trying to channel Paul Volcker.

When Volcker played hardball, Debt/GDP was +/- 30% not 125%

As the stock market continues to fall, US Tax receipts will start to fall also. This (obviously) makes the Debt/GDP number even worse.


jog on
duc