In the face of confusing but potentially beneficial changes to Trump’s tariff policies, futures have continued melting up. No doubt, there is plenty of short covering. The other factor, of course, is the effect that a 15% crash in VIX is having on algos.

continued for members…

The DXY is bouncing back a little, holding the purple .618 at 98.076. It remains to be seen whether or not there will be sustained foreign disinvestment.
Despite the modest dollar strength, CL and RB are higher. It’s early stages, but this bears watching as the relationship is typically inverse (i.e. higher USD means lower oil prices.) And, although the 10Y is slightly lower, it remains broken out and has yet to push back below its SMA200. Bottom line, the market is getting a nice bounce on what could be a derisking on the tariff front. But, it is definitely too early to say whether or not this bounce will be sustained.

The situation with China is extremely fraught and ranges from everything being okay to an economic calamity with the US refusing to pay interest to China to a shooting war involving Taiwan.

I don’t believe for a minute that we are out of the woods.

Stay tuned.