Summary: Markets had been reacting to the war in Iran recently, of course, but perhaps it has been the explosion higher in global bond yields that has triggered a more profound unease on Friday and today. It's also a factor in gold prices suffering a massive meltdown. Today's discussion looks at these factors as well as the ongoing war impacts on the forward oil market curve and the whole commodity space with Saxo Head of Commodity Strategy Ole Hansen. This and much more on today's pod, which is hosted by Saxo Global Head of Macro Strategy John J. Hardy.
Ole’s latest on precious metals.
Written before Trump’s breakfast TACO today, but important perspective on precious metals drivers here.
A playbook from here if the uncertainty extends.
A brave and very thorough take on gaming how this situation may develop in a scenario that assumes uncertainty is set to continue for quite a while longer but that we don’t get into any disaster scenario. There are some interesting comments on how poorly the US understands its adversaries in Iran and lots of great perspective from someone who has been up close during the building of Qatar’s incredible LNG infrastructure.
Could Super Micro be a zero?
Super Micro shares dropped 33% on Friday as the company was charged with having illegally sold Nvidia chips to China via third parties. The company has been caught on the wrong side of the law before on accounting irregularities and was even delisted by Nasdaq at one point. At least one observer asks the question of whether the company might be a zero.
Doomberg long-form podcast appearance.
Doomberg doesn’t believe that energy price hyper-spikes can be sustained due to demand collapse that happens if prices go too high, but is concerned prices can go much higher if supplies remain disruped. Great emphasis on how poorly positioned Europe if this supply shock continues.
Private equity: shield your eyes?
A very long form post on the risks embedded in private equity the moment proper price discovery is forced on the industry, which is plenty big to trigger significant strain on banks and others that are financing these P/E outfits. Someone will be a bag holder for ugly shenanigans involving the worst actors in the space.
While we await more clarity from the war in Iran, one variable worth continuing to monitor is the US treasury market, which has been under massive pressure since this war broke out. Longer US treasury yields are a key variable for pricing US equities and the ramp higher, for whatever reason, is a concern for the equity market and economic outlook Watching the 4.50% level next for 10-year benchmark treasury yield, with 5.00% so critical that some Treasury initiative to prevent yields from heading higher still might arrive before the market would ever be allowed to test close to that level. At the short end of the curve, the removal of all expectations for any further Fed cutting this year have worn on market sentiment. Note that the MOVE index of US treasury market volatility has seen a violent acceleration. Interesting to note that the 10-year yields is only about six basis points from the cycle highs today while the US equity market has rallied far more profoundly. Some tension there until/unless US yields are shoved back into the old, quiet range.
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