U.S. Indexes closed lower following a risk-off session on Monday with equities sliding on fears of further AI disruption, while US President Trump hiked tariffs. The AI fears seemingly sparked from a research piece from Citrini Research exploring severe downside risks if AI exceeds expectations. This is not the firm’s base-case scenario, but it highlighted how unemployment could spike to 10% with the S&P down 38% from late-2026 peaks (which it pencilled in at 8,000) with a recession in 2027. It largely highlighted payments, software and private credit stocks as highly exposed to such a scenario. All of which sectors tumbled on Monday, while IBM also took a chunky hit as Anthropic announced that Claude can now automate COBOL modernisation efforts – further adding to the AI disruption fears. Meanwhile, on trade, Trump lifted his Section 122 tariffs to 15% from 10% over the weekend. Nations like Mexico announced they will now be paying less tariffs on non-USMCA-compliant goods, while the EU has frozen trade talks with the US and is not seeking to alter the pre-existing deal at this stage. Trump has warned that those who decide to play games will be met with a higher tariff than what they recently agreed to. The risk-off sentiment around AI disruption and also the lifting of tariffs saw T-notes catch a bid throughout the US session to settle around peaks, with eyes turning to supply in a data-light week. However, several central bank speakers are on the docket for Tuesday. Waller spoke today, noting it is almost a coin toss for a cut or a hold in March. In FX, the Dollar was mixed versus peers while activity currencies lagged in the risk-off trade. Crude prices ultimately settled slightly lower while eyes turn to the US/Iran talks on Thursday. On this, reports suggest the Pentagon has been pushing Trump to go for a diplomatic resolution, warning about the risks of striking Iran. Trump has apparently been leaning towards strikes, but has agreed to give Witkoff and Kushner more time to negotiate for diplomacy. Gold and Silver rallied on the risk conditions, while Bitcoin slumped. Fed Member Waller said he would support a 25 basis point reduction in March if January labour strength is revised away or evaporates, but may be appropriate to hold if downside labour market risks have diminished. On the March meeting, he views the two possible outcomes as close to a coin flip and details that he will need to see the February report due March 6 before forming any judgment on a labour rebound. Following the SCOTUS decision to strike down Trump’s IEEPA tariffs on Friday, Waller said it may have a positive impact on spending and investment, will look through tariffs if they come down, and added that the ruling is unlikely to have a significant impact on his view of the appropriate policy stance. Ahead, he estimates Jan PCE inflation of ~2.8% over the next 12 months, with core at ~3%, but believes underlying inflation without tariff effects is close to 2%. Waller expects real GDP to grow above 2% over the next six months after smoothing shutdown effects. He noted that there are reasons, including AI, to think the hiring may remain weak, and said a weak labour market is likely to continue going forward. Elsewhere, Gold surged a further 2.5% while Oil closed flat.
To mark my 3325th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it was flat yesterday and is stiil ahead by 5202 points for February, after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 1.04% lower at a price of 6837.
The Dow Jones Industrial Average closed 821 points lower for a 1.66% loss at a price of 48,804.
The NASDAQ 100 closed 1.21% lower at a price of 24,708.
The Stoxx Europe 600 Index closed 0.49% lower.
Yesterday, the MSCI Asia Pacific closed 0.3% lower.
Last Friday, the Nikkei closed 1.12% lower at a price of 56,825.
Currencies
The Bloomberg Dollar Spot Index closed 0.08% lower.
The Euro closed 0.05% higher at $1.1791.
The British Pound closed 0.06% higher at $1.3491.
The Japanese Yen rose 0.22% closing at $154.68.
Bonds
U.K.’s 10-Year Gilt closed 5 basis points lower at 4.31%.
Germany’s 10-Year Bund Yield closed 3 basis points lower at 2.70%
U.S.10 Year Treasury closed 6 basis points lower at 4.03%.
Commodities
West Texas Intermediate crude closed 0.12% lower at $66.40 a barrel.
Gold closed 2.39% higher at $5229.10 an ounce.
This morning on the Economic Front we have U.K. CBI Distributives Survey at 11.00 am. Next, we have the U.S. ADP Employment Change at 1.15 pm and the S&P Composite PMI Index and the House Price Index at 2.00 pm. This is followed by Consumer Confidence, Richmond Fed Manufacturing Index and Wholesale Inventories at 3.00 pm. At 6.00 pm we have a Two-Year Treasury Auction. Meanwhile, we have speeches from Fed Members Bostic, Collins, Waller and Barkin at 2.00 pm, 2.05 pm, 2.15 pm and 8.15 pm respectively.
Cash S&P 500
The S&P 500 fell by around 1% yesterday, but the carnage across the market continues to worsen, with multiple sectors and parts of the market breaking through support levels that suggest more pain lies ahead. The only problem is that, for now, the S&P 500 is supported by a massive level of ‘’Put Gamma at 6,800’’, which is holding things together. Once that gamma level is eroded, and I suspect it will, the Index will likely crack. For now, the only thing holding things together is Nvidia, and I do not think that glue will last much longer. The company will report results on Wednesday after the close, and unless they do something out of this world, I think the stock will trade lower. The delta positioning in Nvidia is very positive, and unless the stock trades over $200 after results, it is likely to head lower. The implied volatility of the ‘’Calls’’ is elevated and will fall sharply once the company reports results. Therefore, if customers are betting on the upside and market makers are short calls and long the stock as a hedge, after the calls collapse in value from the IV crush, market makers will likely find themselves overhedged and will need to reduce that hedge by selling stock. On top of that, anyone who owns the calls at higher prices may very well become sellers too. So, the key level for Nvidia on Wednesday post-earnings is $200. If the stock cannot get over $200, the stock and the entire market will have a giant problem. I am still flat as the market never came close to my sell/buy levels which is no surprise given how far both levels were from Monday’s opening prices. As I am now long the Dow, I will lower my S&P buy level to 6765/6790 with a lower 6739 ‘Closing Stop’. I will lower my sell level to 6880/6905 with a lower 6931 ‘Closing Stop’. If I am taken long, I will have a T/P level at 6822. If I am taken short, I will have a T/P level at 6758.
EUR/USD
I am still flat. Today, I will continue to be a buyer on any dip lower 1.1650/1.1730 with the same 1.1575 ‘Closing Stop’. I will also leave my 1.1900/1.1980 sell level unchanged with the same 1.2055 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1800. If I am taken short, I will have a T/P level at 1.1830.
Dollar Index
I am still flat. Today, I will continue to be a buyer on any dip lower to 96.40/97.20 with the same 95.85 ‘Closing Stop’. If I am taken long, I will have a T/P level at 97.80.
Russell 2000
I am still flat. Today, I will again lower my sell level to 2670/2740 with a lower 2795 ‘Closing Stop’. If I am taken short, I will again have a T/P level at 2625.
FTSE 100
No Change: Much to my consternation the FTSE continues make new all-time highs, helped by last Wednesday’s 1.2% rise. Given both the economic and political backdrop I am completely at a loss why the FTSE continues to make new all-time highs with no two-way price action as anyone shorting the market is forced to cover their positions. I will stay flat the FTSE until I feel I have a better edge in this market. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow led Monday’s decline, ending yesterday’s session with a hefty 1.7% loss. This move lower saw the whole of my buy range triggered for a now 48960 average long position. I will leave my 48595 ‘Closing Stop’ unchanged while lowering my T/P level to 49130. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still flat. Today, I will lower my sell level to 25050/25250 with a lower 25405 ‘Closing Stop’. If I am taken short, I will have a T/P level at 24870. The NDX has short-term support below from 24150/24350 where I will continue to be a strong buyer with the same 23995 ‘Closing Stop’. If I am taken long, I will have a T/P level at 24570.
December BUND
I am still flat. The Bund rallied yesterday, resulting in the 10-year yields falling a further three basis points to 2.7%. In my view there is no value in buying the Bund at these yields. Today, I will continue to be a seller on any further rally to 129.90/130.70 with the same 131.25 ‘Closing Stop’. If I am taken short, I will have a T/P level at 129.30. I no longer want to be a buyer of the Bund at this time.
Gold Rolling Contract
No Change: Gold continues to build value above $5000. Anyone trying to short Gold for any length of time is getting slammed. I have no interest in selling Gold despite believing that a major correction is now due. Today, I will continue to be a buyer on any dip lower to 4780/4860 with the same 4685 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4955. If this view changes I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. Silver surged again yesterday, closing back above $87. Just like Gold above I do not believe that the sell-off is Silver is over giving the extent of the retracement from above $120. Today, I will raise my buy level to 73.50/76.00 with a higher 70.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 78.75
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