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It would seem the market blew off the Moody’s downgrade for now, but it will be interesting to see where the dollar and rates are in a few days’ time. There was undoubtedly a big move in rates overnight, and the dollar today, but when US markets opened, rates came down, and the equity market snapped back.
Stocks opened lower and recovered the losses to finish the day unchanged. The move in the market mainly looked mechanical, with the VIX opening overnight at 20 and closing at 18. With VIX opex still pending on Wednesday, the market seems content to keep the VIX around 18, for the moment. Most of the volume in the VIX today was in puts at 17, 17.5, and 18 for Wednesday OPEX. Unfortunately, if the VIX is going to open at 20 and trade down to 18, then the S&P 500 will have to rally, and there is not much to say about that.
Meanwhile, the 10-year rate traded higher on the day, reaching 4.56%, and then rates started to drop, flat at 4.45%. It was a very odd day, and it was very hard to understand the “whys” behind such moves other than to say these levels are essential, and the market is not ready to send the 10-year rate higher, yet.
The JPY was stronger today versus the dollar, now trading below 145. If it can get below 144, it probably has room to strengthen to 142 and lower. Rates in Japan continue to rise, and as long as rates in Japan climb, it seems likely that the JPY can continue to strengthen.
Outside of that, the USDKRW continued to strengthen. Korea is a very large exporter of semiconductors and memory, and so the market still looks fairly nervous about the potential for tariffs on semiconductors. Knowing that this is out there, I find it odd that the market seems dismissive about the whole thing.
Tomorrow’s a new day, and we will see what it brings.
-mike
Terms By Chatgpt
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Mechanical (move)
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Market movements that occur due to technical factors or systematic trading (such as options expiration or hedging), rather than fundamental news or economic data.
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VIX
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The Volatility Index, which measures market expectations of future volatility based on S&P 500 options.
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OPEX (Options Expiration)
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The day when options contracts expire, often resulting in increased market volatility due to position adjustments.
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VIX OPEX
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Options expiration specifically tied to contracts based on the VIX index.
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JPY
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Currency symbol for the Japanese Yen.
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USDKRW
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Currency pairing between the US dollar (USD) and the South Korean won (KRW).
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Semiconductor tariffs
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Import taxes specifically targeted at semiconductor products, which can significantly impact economies reliant on tech exports (e.g., South Korea).
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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