Blood On The Streets

Well first of all, there was this:

So that’s historical accident, pumpkin that’s rotting on your porch a week after Halloween, and President of the United States, Donald Trump telling North Korea that they’re “going to be in trouble like few nations ever have been in trouble in this world.”

That 24 hours after a giant inflatable chicken with a blond wig on it showed up on the White House lawn:

Chicken

Given that rather surreal state of affairs, you’ll forgive folks for unloading some risk on Thursday, starting in South Korea where the Kospi looks to have run fresh out of gas after climbing to a series of record highs earlier this year:

Kospi

The won has suffered ‘bigly’ since “fire and fury”:

Won

The dip buyers were M.I.A. stateside and the reason is simple: they’re out of dry powder:

AAIICash

It was all red – with tech hit hardest.

Stocks

The Nasdaq had its second worst day of the year:

Nasdaq

Nasdaq “VIX” soared:

VXN

And the VIX was one everyone’s mind. Here are some fun factoids that Bloomberg rolled out about halfway through the day (just to give you an idea of what the action was like):

  • Volume in the iPath S&P 500 VIX Short-Term Futures ETN (VXX) surged to ~91m shares, becoming the most-traded ETP in the U.S., ahead of SPY’s ~33m shares traded.
  • Trading of options on the ETN also jumped, with almost 358k calls changing hands vs a 20-day average of 244k
  • Aug. 18 $13 and $17 calls were the most active and some of the most-traded options in the U.S. listed market
  • VXX climbs as much as 10% to a one-month high as leveraged volatility securities TVIX and UVXY surge more than 20%
  • Inverse-VIX securities XIV and SVXY fall as much as 11%, trimming their annual advance to 75% and 72%, respectively

This is your VIX on “fire and fury”:

Fury

Your favorite short vol. ETPs were a shitshow (for a third day):

XIV

European shares fell to their lowest levels since the first round of the French elections as exactly 0 out of 19 Stoxx 600 sectors rose on the session:

Europe

Emerging market equities were a disaster – worst two-day stretch since May and the worst day for EEM since the December Fed hike:

EEM

Bucking the trend for EM assets was the yuan which, as noted on Wednesday, is trading like a safe haven amid (ostensibly) stable reserves, the sizable surplus everyone suddenly loves so much, Beijing’s concerted effort to get a handle on capital flight, and the fact that China is nowhere near North Korea (shit… wait…). The onshore yuan is at a 1-year high versus the dollar and is sitting at its highest since March versus the basket.

USDCNY

Oil was amusing, as WTI rose triumphantly above $50 early on after the latest OPEC report, only to tumble precipitously throughout the day.

WTI

Basically, range bound. “There’s massive confidence in the fundamental justification of a $45-$50 range,” Clayton Rogers, an energy derivative broker at SCS Commodities Corp., remarked. “OPEC still has powerful levers to pull to protect the bottom end of the range. Traders are also confident that moves above $50 will be followed by substantial producer hedging.”

People are super fired up about gold, just ask the folks Bloomberg surveyed:

  • Gold traders and analysts surveyed by Bloomberg are bullish for a 8th week, the longest run since early March.
  • Survey results: Bullish: 11 Bearish: 3 Neutral: 4

Here’s the visual:

Gold

Ray Dalio is similarly bullish, saying this in a LinkedIn post:

We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this.

Right. You should “relook at that”. Because remember, if there is a nuclear war, you can always eat your gold. Or burn it for fuel. Oh, never mind.

On the bright side for everyone investing in a world where fiat money is being printed by the trillions, you actually can burn paper to stay warm in a nuclear winter.

Just ask Pablo Escobar…

 

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