Gold is a quarter below its January peak with the Strait of Hormuz still shut, which tells you what a five percent ten-year does to a hedge. Good morning and welcome to today's market chronicle. It's Tuesday, October 6.
Yesterday the Nasdaq closed at a record, up about a percent, and Nvidia (NVDA) printed its first all-time high since May. The S&P added about seven tenths. This on a morning when the ISM services price gauge went to 74 from about 73, which is the kind of number that used to ruin a committee's week. The ten-year went the other way and stayed there.
Here is the part nobody wants to sit with. The Fed raised in September, unanimously, to three and three quarters to four percent, its first hike since 2023, and Chair Warsh went out of his way to say that "the plain fact is that inflation is too high, and has been for too long." Futures now put a hike before year end at better than four in five. Meanwhile the street expects third-quarter S&P earnings growth near thirty percent, led by energy, which is led by the fact that a chokepoint carrying a fifth of the world's oil has been closed for most of the year. Thirty percent nominal growth in an economy whose central bank is hiking because prices rise too fast is not a boom. It is arithmetic wearing a boom's clothes.
The last time the ten-year sat here was 2002. I was on a different desk then, junior enough to be sent for sandwiches, and nobody called five and a quarter percent a regime. It was just the number. What they called a regime was equities, which were busy losing half their value. So the parallel is useless, or it points the wrong way, and I keep reaching for it anyway. The detail I cannot put down is the roughly two thousand ships and twenty thousand mariners still stranded in the Gulf since the strait closed. Someone is paying their wages.
Today brings the trade balance, where consensus looks for a deficit near 102 billion against 89 before, a three-year auction, and Williams, Bowman and Schmid in front of microphones. The minutes land tomorrow afternoon and will be read for how many of the twelve want to keep going. Nobody will trade the trade balance.
No single position earned this paragraph today, which is itself worth saying rather than inventing one. So the sleeve. Mosaic Mid-Horizon is up about 1.2 percent over the last five sessions against the SPDR S&P 500 ETF (SPY) up about 1.2 percent on a total return basis over the same stretch. A dead heat, half a basis point apart. That is the weights doing the only job weights are given, in a week the index won on two names.
Gold is near 4,120 an ounce, Brent 100.84, Bitcoin around 85,600 depending which screen you trust, S&P futures up a touch at 7,837, the ten-year at 5.32 percent. The dollar sits at an eighteen-month high, the only thing in that list behaving the way a textbook says it should.
Records and a 2002 discount rate on one screen, in the same hour.
See you tomorrow.
Salomon