Lots of currents and cross currents last Friday depicted a confusing picture which still enabled major US indices to eke out modest gains (S&P and Russel added +0.3%) while the Nasdaq closed unchanged. The Tech tape was far from “all over green” with Tesla, Nvidia and Applied Materials, all positing losses of between 5% and 10%, which were nonetheless covered up as regards the indices by a +2% gain for Apple. The main culprit for the early swoon on Friday was the 8% fall in Tesla shares following a NYT interview from its CEO which depicted E. Musk being closer to burn himself rather than the shorts on Tesla (with his “funding secured” tweet looking increasingly illusionary). Invited to lift the pedal a little and to sleep more and away from the factory by Huffington (who happens to be campaigning in support of sleep following the publication of her latest book “Thrive and The Sleep Revolution”), E. Musk said this was no option over the week end. The COT report published on Friday showed speculators being now slightly net short EURUSD (with non-commercial speculators net shorts at -1.8k for a -12.4k move on the week), completing a long sentiment deterioration on EURUSD. This was the day chosen by EURUSD to squeeze a little, adding +0.5% while EURGBP and EURCHF also gained +0.3%. Similarly, net JPY short remained at an elevated level (as per the close last Tuesday). Speculators remained net long MXN. Although D. Trump promised more sanctions against Turkey “out of national security interest” (read ahead of the November elections and to rally the 25% Evangelist electorate) if the Evangelist Pastor held captive in Turkey is not freed, sentiment leaned more towards appeasement on Friday allowing EM equity, debt and currencies to post some gains. Fitch confirmed Russia’s credit rating on Friday with a positive outlook despite the new sanctions. German officials approved Nord Stream's construction and operation permits in 1Q, and U.S. opposition to the project isn't likely to persuade German lawmakers to change their minds, Bloomberg reported. Venezuelan President Maduro announced a 95% devaluation of the bolivar sending the currency from 285,000 per dollar to 6 million while also raising the minimum wage 3,500 percent, Bloomberg reported. The new bolivar’s value will be linked to a crypto currency, the so-called Petro backed by crude oil. Gold and silver also managed a nice bounce on Friday gaining +0.5%-+0.7% with gold shares rallying 3% as well. Friday’s COT showed commercials (those holding the gold market captive) turning slight net longs which boded very well just as sentiment on gold hit 26 years low. Gold in EUR was stable due to the dollar selling off on Friday. 10Y US Treasuries and 10 Y Bunds saw their yield fall by 1bp and the situation was calm in Italy with spreads ending unchanged. The COT report (see last chart in this summary) suggested a very large increase in the speculative net short position in 10 year note future (and 30 y note as well) to a fresh historic high which might very well end up being squeezed if sentiment on risk appetite does not improve.
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