1. Oil Snaps Back — Iran Says No Deal
Yesterday almost felt like a relief valve. And Hey! The market showed its hands too…in case peace talks are happening for real.
Trump said the US and Iran had “productive conversations” and ordered a five-day pause on strikes against Iranian energy infrastructure. Oil dropped. Markets surged.
Then just few minutes later, Iran came out calling the whole thing fiction — no talks, new attacks on US targets, Israel still striking. As I write this, WTI crude is back above $90 and Brent is climbing back over $103. The Strait of Hormuz is still a problem. Don’t get run over chasing a ceasefire that may not exist. Watch the narrative though, and market also showed its hands.
2. Gold Down about 20% From Its High — Is This a Buying Opportunity or a Warning?
Not too long ago, gold was roaring. Right now, it’s trading around $4,400. That’s a relatively big correction, and not very common.
Why is this happening? Several reasons, but the sticky inflation, yields going up, and dollar holding strong is the biggest quoted elsewhere.
But, do not forget gold is also very liquid and if its selling off like this, there’s a chance that some sort of liquidity issue is brewing. I went back and looked at 2008 – there were three times during that year when gold dropped 20% or so withing few months.
$4,400 is a big level. If that breaks, we could get $4,100 very quickly.
3. S&P 500 Failed The 200-Day Moving Average
The move yesterday on the stock market was great and all, but the S&P 500 failed the 200-day moving average in a very big way. This shouldn’t be taken lightly. In the past 10 years, the S&P 500 has broken below this moving average handful of times, and each time was followed by quick punch in the face – except for 2023.
Levels to watch on the upside: the 200-day moving average.
Levels to watch on the downside: 6,500. A break below it could be very ugly.
Right now, it’s a lot of headlines dominating the markets. Headlines are hard to predict when they will come, and a lot of times reaction can be lot different than one would expect. Stops are important.
Also, you remember how just few months ago everyone on Wall Street was bullish on stocks? Are we getting 7,000 S&P 500 this year?
4. More Headlines Around Private Credit
Ares announced this morning it’s limiting withdrawals.
Apollo also announced that its limited withdrawals.
We know Blue Owl, Blackstone, KKR, and bunch of other BDCs are seeing serious withdrawals too.
The reason we are told? A lot of these funds lent heavily to software companies now being disrupted by AI, and retail investors who were sold on “democratizing” private credit are heading for the exits. When a fund can’t meet redemptions, that’s not a good look at all.
This story is in the making. Its opaque. Biggest catalyst will be if some big bank/ or even bunch of regional banks come out and say: we are exposed.
5. U.S. Dollar, Bitcoin, And Pain In The Emerging Markets
U.S. dollar is so choppy at such an interesting level – keep a close watch on 100. If that breaks, it goes higher. But, we also know that its war headlines driving it a bit.
Bitcoin is in some sort of uptrend. But! $75k is proving to be a big level. If that can’t be broken, don’t be shocked if it gets back into that dreadful range it had been trading just few weeks ago.
Food for thought: take a look at what’s happening to emerging market stocks. So much pain there, but does that also mean opportunity?