highlights

Many frustrated

Many are asking what the fudge as vol sags and equities won’t give up the ghost

April 13, 2026

Aadam Jacobs taped over 10,000 concerts and the recordings are being uploaded onto the web.

Links at bottom of page.

Current Views

Flat

Currencies

Most FX traders’ first instinct today was to look at what oil has done and think: “Wow, the USD doesn’t trade very well.” This fits with the narrative which I have been pumping (and which is the most popular broad narrative for the USD, I believe): The war in Iran will become less and less USD positive as time goes on because it diminishes confidence in U.S. hard and soft power and makes large holders of U.S. assets nervous. Whether or not that is true, that seems to be the prevailing narrative and that’s got most people thinking the trajectory here is: USD stable or small up during the conflict and risk aversion =======> USD down large when the dust settles.

The thing is, EURUSD’s reaction to the moves in oil has not been all that reliable. There is a mild lean where higher oil is bad for European terms of trade and so on, but if you look at the daily data since the start of the war, and zoom in on Sunday/Monday—the reaction in FX is pretty meh.

The red dots are Sunday/Monday, black dots are all the other days of the week. I labelled the ECB meeting (19MAR) because that’s an outlier. And I labelled today. The reason I go through this exercise is because while at first I was thinking “Bad news/good price” for EURUSD (bullish), once I looked at the data, I realized that it’s not really true. I don’t see any forward-looking read from this USD price action.

The most mind-numbing aspect of FX markets as we open up Bloomberg this morning is the state of FX vol. We were priced for two weeks of negotiation and most everyone that I knew (including me) was pretty optimistic that we would see lower vol and higher risky assets as the market got bored of the Iran theme during the ceasefire. Instead, talks broke off, oil is up 8%, and FX vol has done this:

Maybe this lack of movement in FX vol is consistent with the narrative? If the view is that we go nowhere during the conflict (push and pull the dollar) and then the USD sells off hard after it’s done… Then continuation of the conflict means more confusion and more going nowhere and thus there is no reason to buy FX vol? And once we get visibility on the end of the conflict, everyone rips EUR, AUD, and other currency calls? I think that makes sense.

There is also a small bullish EUR impulse today from the election in Hungary as a more EU-friendly candidate wins there. Overall, I think it’s reasonable to think about correlation break trades like “Long EURUSD + long CL” or “Long KORU + long CL” as we get higher for longer crude oil but the market doesn’t really freak out about it as much as before.

Stocks

I talked about this last week, but I continue to be floored by the flip in tech flow and sentiment. Two more examples in my inbox of late as US Info Tech sees its largest $ net selling in more than five years (GS, via Chuck, via Twitter). And Vanda’s flow tracker has foreign investor positioning in Korea at minus five standard deviations! This is pretty mind-blowing considering we were in the teeth of a bullish retail bubble in Korea just two months ago.

It’s hard to be bullish right now given the situation in the Middle East, but it feels like at some point tech is going to be a beach ball underwater. I understand there is mega dispersion right now and software is dead due to price compression etc. etc. But that is just what people think today. Who knows what they will think tomorrow. The margin of safety is growing in some of this stuff. I’ve got IGV, KORU, and MSFT on my bullish radar.

Calendar

I present: A sparse calendar in a week where nobody cares about economic data.

Given the Strait is still under Iranian control, these talks will either have to yield a compromise or a complete U.S. capitulation. Either is possible, but I suppose the third option is that the 2-week ceasefire is just a pause to allow the U.S. to reset and figure out a new strategy. I am in scenarios/planning mode here, not forecasting mode.

Final Thought

There are two less-famous behavioral concepts that I believe strongly in. The first is the cheer hedge. The second is the WTF indicator. This indicator (which stands for: What the Fudge?) triggers when every person I am talking to is asking “What the fudge?” about a move. This is happening this morning in stocks. People are beside themselves with some mix of confusion and rage because stocks are barely down.

That’s bullish.

Have a grungy day.

The Spectra FX Positioning and Momentum Report

Hi. Welcome to this week’s report. (To read about how I use and trade this report, see here.) Positioning has come all the way back down as the raging USD bull hedging freakout has passed and vol subsides. The market continues to prefer AUD and EUR to most other currencies and there has been some recent appetite for CAD, too, as people feel the bearish economic story is getting stale and the Canucks will benefit from higher for longer oil prices. Small contrast in positioning vs. momentum in some currencies as (for example) market is small bearish EURUSD but momentum is small up. That is usually bullish EURUSD.