Shutdown odds

We’ve got ourselves another spin move in equities and USDJPY as Democrats have conceded in the face of rising discomfort around flights and SNAP payments. I get that the Senate is going to vote to end this thing, but I am not 100% clear why the House is a sure thing. The gamblers seem to think it is, though…

So, I suppose any bad news from the House is meaningful given the pricing, but I don’t have the expertise to handicap that. Here is the timing, according to bettors on Kalshi:

Reopening by November 15 is just about fully priced in for now, so any deviation or delays from that could be viewed as risky for this rebound in liquidity. While the economic impact of the reopening is modest, the return to full liquidity and maximum deficits has turned the liquidity taps back on and silver and gold are particularly excited about this.

To give you a sense of the reactions to the reopening news, I ran our Global Macro Heatmap sheet. It includes single name equities, which are not open, so anything you see under a stock ticker (XOM, XLP, etc.) is Friday’s move. So only currencies, commodities, and fixed income are up to date here. Everything is normalized by average daily volatility, so if gold says 2.07, that means it has rallied 2.07X its average daily vol. The mosaic of moves is fairly intuitive, though the moves in precious metals are larger than I would have guessed they would be and I don’t think I’d have guessed the DAX would rally much more than NASDAQ.

This result is not good for my USDJPY bearish view or for my AUDNZD short. I am neutral on the USD from here and I will stick to the plan on the AUDNZD, acknowledging the rip higher in metals isn’t particularly helpful.

This week’s calendar offers little to chew on, though tomorrow’s UK jobs could matter, and we will need to get used to the weekly cadence of ADP.

The president’s tweet that he would like to offer a $2,000 stimulus check as a rebate of the tariffs collected so far is another boost for precious metals. While the offer is not particularly credible, and is reminiscent of the oft-promised DOGE dividend or the plan to make Greenland part of America, it does show a consistent intellectual preference to run it hot and ignore ballooning deficits.

If gold = 1/trust, a desire to refund tariff revenues decreases trust in fiscal sanity and boosts precious metals. Then again, it could be a political ploy to make the SCOTUS look scroogey if they pooh pooh IEEPA.

The calendar here shows how 2013 played out in terms of the missed NFP. The skipped NFP came out the Tuesday after the shutdown ended so we could get September NFP next week, if 2013 is anything to go by.

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Positioning

Positioning feels a bit out of date given it’s a 1-week lookback and everything flipped this weekend.

G10 FX Positioning and Momentum Scores

Final Thought

I am interested to see how Palantir trades today. The blowoff after earnings wrecked the topside momentum trade, but the critical 165/170 area held (major horizontal support plus 100-day MA). So now we are in technical purgatory with 188/191 on top and 165/170 below. You can see the hourly moving averages have flipped and come in at 186/189.

This is going to be a heck of a battle for the next day or two, I think.

Have a hard-fought day.

On this day in 1996

Felix Potvin and Ron Hextall (two NHL goalies) skated to center ice and fought each other. One of the most famous hockey fights of all time.

I was at the game!

Video here

good luck ⇅ be nimble