Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1.Main Event of last week
Not just the main but the huge event of the week was President Trump’s trip to Beijing. Huge it was but it was also utterly confusing. How did the Taiwan issue become THE MARKER for China & USA in this “summit” when the overwhelming problem today for both USA & China is “Iran”? What is worse is President Xi laying down his marker about Taiwan to President Trump!
Virtually every major asset class took a hit in the aftermath. But clearly Chinese ADRs took the biggest fall. To her credit, CNBC’s Melissa Lee pointed out on Thursday’s Fast Money that Thursday was the worse session for KWEB. The fall continued on Friday with KWEB down 9% in the two days President Trump was in Beijing. Guess Xi acting like “Tremblingly Obey” edicts of earlier Chinese emperors was not positive for Chinese equities. Seriously why didn’t Trump-Xi restrict the discussions to Iran? Is it because that ship had sailed already before Pres. Trump landed in China?
The weird part is that America seems to have fallen into the same classic trap in which America has fallen every time in the Indian Subcontinent! The idea that Na-Pakistan was an American friend if not an ally & using Napak’s good offices will help US interests in the Indian Sub-continent!!! Heck, even Senator Lindsey Graham lit out at Napak when it was revealed that they hid the Iranian planes from US eyes in their own shelters.
But that was minor. Remember USA has imposed a ban in practice from supplies entering Iran from the sea!! Guess what has now become public! Hail China-Pakistan Economic Corridor! The supplies Iran needs are entering the Sino-NaPak deep-seaport of Gwadar located about 85 miles south of the Iranian border. From there, the supplies travel by road into Iran. So while pretending to be a friend/ally/agent of America, NaPak is actually assisting Iran-China in delivering critical supplies & munitions to Iran via the simplest & shortest land route from Gwadar Harbor.
This is the same Napakistan that basked in the glory & monies for acting as America’s “critical ally in the war on terror” against Afghanistan.
This plan is almost ingenious. Gwadar is just south of the US Blockade line that ends at the sea line separating Iran from Napakistan. So there is NO prohibition for China, Napak & any of their allies to dock at Gwadar & then send the supplies via Chinese-Napak security forces about 85 miles into Iran. Now watch CBS News describe the blockade as 100% effective. Seriously folks, doesn’t this remind you about the “success” of the “war on terror” using Napakistan “against” Afghani Taleban?
So far one player was missing in the anti-US posture in the Persian Gulf, the one player who seems to have built nuclear weapons while being under US Sanctions – North Korea. Guess how they are involved in this US-Iran ‘conflict”!
- According to a report by Military Watch Magazine, Tehran has deployed lightweight attack submarines reportedly based on North Korean-origin designs into the strategic waterway. The stealth-focused vessels are designed for shallow-water warfare and surprise attacks, making them difficult to detect in the crowded waters of Hormuz. The deployment comes as President Donald Trump described the Iran ceasefire as being “on life support,” raising fears that the Gulf may once again be moving towards a dangerous military confrontation involving shipping routes, naval assets, and regional allies.
We like most thought that in the open waters of the Persian Gulf, the US Navy would have overwhelming dominance over the light-weight naval vessels of Iran & its allies. Apparently, the narrowness of the Straits makes large ships vulnerable. Now we have no idea what is going to happen – whether the conflict will remain on a quiet boil or upgrade into a live conflict.
The simplest description of the past 2 days came from Dan Niles who said “like one of these is wrong“. One of which you ask?
- “stocks are all all-time record high; oil prices are up 60% this year and the bond market-30-yr & 10-yr yields- hit the highest levels for the year“
2. Markets Last Week
2.1 US Indices:
- VIX up 8.3% to 18.48; Dow down 17 bps; SPX up 14 bps; RSP down 1.2%; NDX down 38 bps ; RUT down 2.4%; MDY down 2.4%; XLU down 1.9%; SMH down 1.8%; SOXL down 7.2%.
How does the 6th time in history unfold?
- Seth Golden@SethCL – There have only been 5 other times in Tech sector history where the RSI was above 83. In every single occurrence, Tech was lower 2, 3, and 4 days later. Will this time be different? (Don’t use studies in isolation, pair and cross-reference data sets when possible for greater probabilities) $SPX $XLK $AAPL $NVDA $SMH $MU $MSFT $SPY $QQQ $NDX $HACK $PANW $CRWD $PLTR h/t @Bluekurtic
2.2 MAG 7:
- AAPL up 2.4%; AMZN down 3.1%; GOOGL down 1%; META up 75 bps; MSFT up 1.6%; NFLX down 54 bps; NVDA up 4.7%; MU up 3.1%;
All eyes on $NVDA for Wednesday!
2.3 Key Financials:
- BAC down 3%; C down 1.7%; GS up 1.3%; JPM down 1.4%; KRE down 4.1%; EUFN down 2.6%; SCHW up 2.6%; APO up 1.6%; BX down 4.8%; KKR down 5.4%; XHB down 6%; ITB down 7%; NAIL down 20.3%; IGV up 69 bps; CRM down 4.6%; PANW up 16.8%
2.4 – Dollar & Metals
Dollar was up 1.6% on UUP & up 1.4% on DXY:
- Gold down 3.8%; GDX down 7.7%; Silver down 5.4%; Copper down 11 bps; CLF down 6.4%; FCX up 2.2%; MOS down 1.9%; Oil up 11.2%; Brent up 8.7%; OIH up 4.7%; XLE up 6.7%;
2.5 – International Stocks:
- EEM down 4.2%; FXI down 2.8%; KWEB down 4.7%; EWZ down 7.4%; EWY down 6%; EWG down 3%; INDA down 3.7%; INDY down 3%; EPI down 3.7%; SMIN down 4.1%;
Rerating?
- Mike Zaccardi, CFA, CMT 🍖@MikeZaccardi – Sun 5-17 – Nobody’s talking about international stocks re-rating from near 16x P/E to 14x P/E $VEU @yardeni
So what does one do with a 20-PE market? Watch Goldman Sachs Asia strategist Timothy Moe say:
- “the firm has turned more conservative on India after the Iran conflict triggered an energy price shock. Goldman cut its FY26 earnings growth forecast for the MSCI India index from 16% to 8%, warning that consensus downgrades may continue over the next few quarters…. at 20 PE this is not positive“
Remember how Grasso & other CNBC Fast Money members used to recommend buying $CME! Our similar belief is about $BSE.NS – the stock of the Mumbai Stock Exchange. It actually went up on Thursday & Friday when most stuff went down hard. And, of course, Adani Ports (ADANIPORTS.NS) keeps acting well as a beneficiary of the mess in the Persian Gulf.
2.6 Treasuries & Interest Rates:
- 30-year Treasury yield up 17.8 bps on the week; 20-yr yield up 20.6 bps; 10-yr up 22.9 bps; 7-yr up 23.9 bps; 5-yr up 24.5 bps; 3-yr up 22.7 bps; 2-yr up 18.8 bps; 1-yr up 7.3 bps;
- TLT down 2.8%; EDV down 4% ; ZROZ down 4.4%; HYG down 85 bps; JNK down 83 bps;
How does Rosie Rosenberg view this? His summary:
- “As we keep saying over and over and over again, there is no such thing as any sustainable inflation without the labor market playing ball. This is what happened in the 1970s when the economy was unionized and everyone had a COLA clause, which built wages into the inflation system. That cycle was perpetuated until Ronald Reagan broke the back of organized labor, starting with the firing of striking air traffic controllers in the summer of 1981. Yes, we had an 18-month wage-price spiral in 2021 and 2022 when the government decided it was wise to pay people more to stay out of work than to work, just as the economy was reopening from the pandemic. In any event, gaze at these two charts below, and tell me if you see a wage impulse coming out of the energy (and soon to be food) shock. The “spot” wage number in April receded to a five-month low, and the wage-plan index remained tied for its lowest reading since last July.”
Now the sacrilege of Ryan Detrick saying bonds may be better than stocks here:
- Ryan Detrick, CMT@RyanDetrick – It is no secret we’ve been overweight equities and underweight bonds for going on more than three years now (which has worked out quite well). But with interest rates up where they are, could it be time for bonds? @gilbert3142 of the @CarsonResearch team takes a look at this very important question.
3. Ever heard of Netflix crashing?
Guess what happened when Dhurandhar 2 The Revenge was released on Netflix? Netflix put a RAW & UNDEKHA (unseen) label across the film’s release graphic. Guess everyone knows that the Revenge in Dhurandhar-2 was against the ISI-terrorists who attacked Mumbai on 26/11 just as the of al-Qaida terrorists attacked NYC World Trade Center on 9/11.
So how did the Napakistani viewers to the Netflix release Dhurandhar 2 in their country?
- “The buzz was ignited by Pakistani content creator Maviya Umer Farooqui, who claimed that the excitement around the film was so intense that viewers coordinated to log in simultaneously at midnight the moment it dropped on the platform. According to Farooqui, the collective surge in traffic was powerful enough to crash Netflix servers in Pakistan, leaving fans staring at buffering screens despite strong internet connections. He shared video evidence of the repeated pauses and noted that this was not a connectivity issue on his end.”
If that is not enough, now there is talk of a Dhurandhar 3 film coming next.
What is really remarkable is that the US media completely ignored the BRICS Foreign Ministers Summit that took place in Mumbai this past week. Weird because the BRICS Summit was almost entirely about the Iran situation. But not to worry! Secretary Rubio knows it well & he will discuss it in detail when he lands in Delhi on May 24 for a 3-day meeting.
Send your feedback to editor.macroviewpoints@gmail.com Or @MacroViewpoints on X.
