Axel Merk

In 1971, Nixon "temporarily" closed gold window. In 2008, central banks "temporarily" went into crisis mode. I'm temporarily skeptical it will all end well.

The most recent CFTC data are published Friday afternoon as of the most recent Tuesday. and, no, this is not an encouragement to trade derivatives.

CFTC positioning: USD as Iran hedge Chart: dollar weighted exposure in million dollars versus number of non-commercial participants (speculators) large dot: most recent small dots: last year grey dots: last 10 years green: long red: short src: BBG, Merk

Key metrics Ukraine vs Iran. "Breakeven rates" are inflation expectations For illustrative purposes only. Note that these are only 16 trading days, so do not over-interpret these, merely showing differences. source: Bloomberg, Merk

2 years inflation expectations. Similar as in 202 For illustrative purposes only and not meant as forecasts.. Source is Bloomberg, Merk

3w into conflict, gas prices on higher trajectory than in 2022 (Ukraine invasion). WTI 1M/6M spread off peak inversion, so are implied vols for WTI. 2YR inflation expectations on similar trajectory as 2022. LT inflation exp not reacting much -> long-end real rates are up

Interested in a new Porsche? Head to Lamu, Kenya... Thousands of luxury cars are sitting in storage in Kenya. Ships scheduled for Dubai have been diverted to sit out the war. Over 4000 vehicles arrived so far, with another 5000 expected in the coming days arabnews.com/node/2636983/b…

Separately, Germany is building its own version of the NSA. Germany's intelligence service is vastly expanding what has to date been a small section. sueddeutsche.de/politik/bnd-bo…

Germany to ease weapons export restrictions for 6 months to support Gulf states & Ukraine, according to @BR24. Previously, every single transaction had to be approved, now focus on reporting requirements.

sorry, I thought you are old enough to know ;-) It used to be called triple witching. Clear now? Below the google AI answer. Basically it's the alignment of expiration of different types of derivatives. Market makers providing liquidity for derivatives manage their hedge books - they tend not to take a position of the underlying security or commodity. Managing these hedge books can increase volatility in markets, depending on positioning of the hedge book. When there's large positioning at certain strike prices for options, it can also create volatility to "push" the underlying price round. In the old days, triple witching was a big event. Over the past decade plus, expiration events have received less attention, but they continue to be a potential source of volatility. The term changed to quadruple witching when options on futures were introduced. none of this is advice on derivatives, nor to trade them.

@AxelMerk For those of us who are not in the know, please explain “quadruple witching”.

just a reminder that tomorrow is "quadruple witching" volatility today may in part be attributed to the hedging of options traders

one way to think about it: if you think the price at the gas pump is bad in the US, be glad you're not in Europe.

WTI versus Brent crude -- the lower pane shows the spread. src: BBG

Gold 1 day moves over the past year src: bloomberg

Ha! I don't recall someone introducing themselves as "Montana Troutslayer", but I just looked at your profile picture - for that meeting, if I recall correctly, I flew in with a Cessna (a Cessna P210 to be precise) -- I accepted some of those invitations in part to fly - that way, the trip was worth it regardless of how the meetings would pan out...

@AxelMerk 👍 Just remembering first time I met you Axel…You spoke at CFA dinner in Phoenix during great financial crisis. Also on the panel was a guy from Bridgewater (who said Great Depression had just started).

okay.. one more - silver vs gold:

@Troutslayer7272 let me know next time you're invited to a wedding - would love to stop by and see!

@AxelMerk I own both. But I view gold as the distinguished older gentleman at wedding. Silver is the crazy drunk uncle dancing with a lampshade on his head

Trump may double down on fiscal or regulatory initiatives should the stock market tank. The Fed's focus is credit conditions. If those deteriorate, expect action, otherwise they'll be mostly on standby. Of course if credit conditions deteriorate, the stock market might tank which will then get the blogosphere allege the Fed is coming to rescue of the market. Relevant for this perception may be the advent of Kevin Warsh - he will be clearer in articulating the difference. I happen to think those nuances are important medium term for the health of the market.

@AxelMerk I understand what you mean on that and agree My point: Trump is stock market guy but he isn’t on Fed board. He will exert extreme pressure if stocks fall. That asset deflation will give Fed cover to deliver the stimulus Trump will demand

Perfect day to ask the question... the price of $gold a year from now will be