Stocks and the USD

Stonks

The S&P 500 has now 10X’d off the 666 handle touched on March 6, 2009. It’s extremely unusual for the S&P 500 to 10X in under 20 years, as you can see here:

Does this mean anything? Not really. But it is a mildly interesting feat for the index accomplished just as we enter the worst seasonal week of the year (the week after September OPEX). It also comes as the put/call ratio dumps and crypto sags out of nowhere.

Note in the next chart how the turn lower in ETH in late January 2025 (the red line) was an early flag for risky asset weakness to come. The NASDAQ rallied for two more weeks then sold off in two major waves, bottoming just after Liberation Day. It is notable, however, that silver hasn’t yet got the memorandum, so crypto is a bit of an outlier among the liquidity sponges for now.

I will also note that it feels kind of stupid to write anything bearish about stocks right now because they never go down. That could also be a useful anecdotal sentiment indicator. When it feels stupid to publicly express a particular view, you can bet that view is not oversubscribed. If you were ever going to take a shot at tactically shorting megatech, this seems like the place to do it. If NQ takes out 25k, I will reevaluate this thought process, and until then I will be leaning short stuff like APP, CRWV, and RGTI—or anything else that feels bubbly.

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FX

The malaise in FX markets continues, though there are a few signs of life for the USD as it could not sell off on the dovish Fed or the hawkish ECB last week. Furthermore, USDBRL, the hottest of the hot expressions of USD bearishness, has held key support. In am/FX on September 16, I posted a chart of USDBRL and said:

The USDBRL chart is also approaching a key zone. 5.2870 was the spike high in April 2024 and once we smashed through it on June 7, we never looked back. Patient lovers of carry have found BRL to be the gift that keeps on giving. It will be interesting to see whether we crack that level easily or end up bouncing off it a few times. My guess is that we bounce and if you reduce near 5.29 you will get a chance to add back at 5.39.

Update here:

The key level held, and we saw some local buying of short-dated topside. I think that chart is important, even if you don’t trade Brazil, because USDBRL is the most popular expression of the dollar down trade due to its high carry and the Tarcísio kicker. The hold of 5.28 puts USDBRL in a 5.28/5.41 range for now.

On positioning, despite super-mixed scores by currency, our data now (surprisingly) shows a tiny USD long bias.

G10 FX Positioning and Momentum Scores

A good portion of the change in our positioning scores comes as the option market moves significantly in favor of USD calls. For example, here’s the 1-month USDJPY risk reversal.

And some of it is simply a product of momentum as positioning chases price in JPY, GBP, NZD, and CAD.

 

I continue to like USDJPY and USDCAD higher this week as I don’t think there is much ammo or reason to sell USD, while corporates will be buyers of USD as month-end nears. US 10-year yields tickling 4.20% would help my view significantly as I think as we get close to that level, the lower yields regime will come into question and we will see an acceleration higher in the USD and lower in crypto and NQ.

Have a no tears kinda week.

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Trading Calendar for the Week of September 22, 2025

 

This article about optimal onion cutting for maximum piece-size uniformity is weirdly interesting

(if you are a nerd)

good luck ⇅ be nimble