Macro Update – 07/01/2025

[00:00:00.07] - Speaker 1
Sa.

[00:00:38.08] - Speaker 2
Happy Monday everyone. Welcome to our weekly macro update with Tim. Thank you for joining guys. Welcome Tim. Happy to have you here.

[00:00:49.02] - Speaker 1
Good morning ladies and gentlemen from ever. Where are you from?

[00:00:56.12] - Speaker 2
All right, I think we, we can kick it off and just go over some macro updates and then this week is going to be of course a short week with the 4th of July. Coming and then next week cryptogram models. So stay tuned. We're going to have a lot of live events next week from Tuesday. Very excited about that. But for now Tim, I leave it to you.

[00:01:25.12] - Speaker 1
Yeah, actually we have a life together next week right with the crypto stuff coming up. I guess. Okay. Right.

[00:01:31.22] - Speaker 2
Yes.

[00:01:35.14] - Speaker 1
Okay ladies and gentlemen. Yes. Let's run through the stuff I have prepared for this week. As Fabio mentioned already, it's a short week of course 4th of July on Friday. Really happy you guys are getting an extra holiday on Monday as well for the next week. So market is closed over there too. Keep this in mind. Nevertheless, few things I prepared and we have to a little bit talk about last Monday. We also skipped the macro update a little bit because few of us have been traveling around. So I packed it together and yeah let's start with spx. As usual in the first slide from the last week data wise it was pretty light. There was yeah nothing big to discuss. Markets drifting higher as you can see already. What was a little bit notable was the Sunday Globex open in ES futures. And if you are running the SPX like I did it here, it does the converse the conversion into the SPX prices already. So don't wonder. This XPS chart here runs 24 hours a day. It's just a different ticker. Just want to highlight the dump on the Sunday open where we opened a little bit lower but from then we had yeah relentless buying over the week with the key strike caught like that 6,000 in SPX it was yeah don't look back to that price.

[00:03:12.16] - Speaker 1
Call it like that. We drifted higher. Tuesday, Wednesday, Thursday first day with a little bit of data Europe the goods goods orders in the US Pretty solid. Friday was a little bit of yeah event risk with the CO PCE price index but as you can see the stock market is not caring at all about this stuff. Data wasn't that bad to be honest. It was okay. This week is way, way more important for us and we had a little bit of selling midday on Friday. I think it was also a little bit due to yeah Donald Trump comments with tariffs and regarding something to Canada. I guess there was also a little bit selling in the Canadian dollar versus the US dollar But like an hour later everything was bought again. We can call it like yeah end of quarter, end of month, end of half year flows because today is basically the last trading day of those three time frames and as of now we are yeah trading around 6262 even kind of in SPX. But let's dive into the week today nothing is on the deck especially data wise at least nothing yeah worth to mention from my side because it's a short week.

[00:04:38.01] - Speaker 1
We will already start on Tuesday with the yeah first job data stuff in form of the JOD openings. Also we have the ISM manufacturing PMI coming up and that's basically the most important stuff for Tuesday. Don't wonder if you are looking at those calendars as well. On the Tuesday 9:30am Jay Powell held a speech but this is because the ECB in Europe, the central bank has a meeting where all the yeah. Central bankers from the world are gathering and yeah throwing stuff at us verbally but just to make sure around this time if you are seeing let's say yeah spooky price action everything can happen. Just be aware 9:30 Tuesday power is held a speech Then Wednesday also nothing big to mention and Thursday should be the most important day for next week July 3rd with the non farm payrolls this day on the first day because Friday is closed already and yeah the market is expecting around 110100 ish. Some surveys are saying 105 to 150 ish the last weekend last month NFP was 139000 new jobs have been created. So the important message here behind is we basically yeah need this growth right for the market to drift up higher and yeah ignore weakening signs wherever they come from.

[00:06:22.16] - Speaker 1
And basically you can say like that if we are dropping below 100,000 it should be led into a little bit of selling in risk in risk assets like tech or. Yeah let's keep it like that. The SPX in general. Yeah but overall if we look a little bit into. Yeah it's actually baked in. In iv. We will do this later. No one cares really that much about it. We are really confident here in these levels in the indices. So yeah first day should be really interesting because we have also later on the day on Thursday 10:00am EST the ISM service PMI and of course people were also looking over there how we are doing in the service sector. And yeah what was pretty watched the last times the survey came out was the prices paid component which basically says whatever service act you are Demanding from whatever you are. Yeah what you are have to pay for this. Right. And those are on the rise like three, four last months so in the back of your head yeah the inflation bell should ring a little bit. Market isn't focused on that from my perspective what I can say but yeah should be interesting and yeah Friday mentioned already holiday the most crowded trade today.

[00:07:59.16] - Speaker 1
What up today? Last week's last month short dollar that's the reason why I put this little chart over here. Didn't find a place where I can put it elsewhere just put it here and yeah actually a trade from me last week 5 day swing with the mental Q5 day swing model within the SPX the left slide is from the 20th and the right one is from the 27th of June I basically look at those stuff like two times a week set a few alerts in SPX and yeah the model gave us a low and the low on Monday with the Global Open was 5,908 and the cash session low from 9:30 was 59.42 and I just decided then during the real trading hours on Monday buy a few upside calls 6100 weeklies paid off nicely. Size wasn't that big was two calls something like that Just want to highlight here that we have this yeah stuff in store and you can always use it and yeah worked out pretty pretty nicely so this is basically one of the main stuff I did last week the other stuff we will talk about later in the presentation and how it looks today in SPX if you are watching your charts or watch list in this morning with interesting volatility up spot up correlation already again this can be happened because normally everyone will say well if volatility goes up in terms of WIX that's usually not telling us the spot so the SPX is going up but it can do actually right.

[00:10:02.07] - Speaker 1
This is due to options positioning yeah mainly tilted to the upside short camera if spot goes over there the market making has to hedge a little bit always this yeah affects volatility as well so don't get confused if you are seeing this stuff in the morning or due to the week in VIX it's actually pretty pretty interesting. We haven't seen that much yeah new lows right despite we made new all time highs in SPX already that's kind of interesting. It's just wandering for me what will happen if yeah volatility crush even more further in Vix like 14 sub 14 handles something like that will just fuel another big big up movement SPX so that's something you should definitely watch and yeah have it in your mind. Today also is the infamous JPM color restriking in the spx. So this is the left upside chart I have here with the three levels from the previous caller. This big, big hedge gets restriked later in the day. It can happen that if you are ES trader or if you have SPX options on that later in the day you will see a little bit of movement. Yeah because the used strikes are rolling in and yet the market making has to digest this stuff a little bit.

[00:11:37.24] - Speaker 1
So just a small head up for today. We have the JPM collary strike. All right, what else? Yes, ATM term structure SPX options and volatility risk premium on the right side. As you can see we have already bled out a lot of implied volatility like the last few weeks. We had several stories in the market going on, right. Tariff talks, we had a FOMC meeting. Of course we had CPI data like two weeks ago and also the situation Iran, Israel. Right. Like a month ago. I have told you about this specific topic already the most important parts about it but it was a little bit. Yeah. Of worrying in the market. Let's keep it like that. But as you can see we lost a lot of this implied volatility on the right chart. The big one with my nice drawings in there we dropped massively like from the 1 month ago IV and the 5 day ago IV. Nevertheless we have still positive volatility risk premium. This is always a measurement. I'm looking into it if I wanna yeah. Start to preparing a trade in terms of volatility as of now doesn't look rewarding to me.

[00:13:12.28] - Speaker 1
Volatility risk premium still positive has to go negative in my view. Did I start beginning thinking about a trade in some volatility longs? All right, brings us to the next topic with new all time highs in the Q's and the spx. Well the IWM is lacking. Right. So the last week or the last day there was. Yeah. Outperforming of quality tech stocks. You all know them? Yeah. Max 7 mostly outperforming small caps outperforming the RSP which is the orange line. What is the rsp? The RSP for the new listeners is the equal weighted SPX index. So all stocks are yeah. Equally weighted and we don't see new all time highs over there. It always indicates a little bit that some sectors I have mentioned a little bit earlier are doing better in performance. Right. This is nothing bad in particularly, it's just a trend Worth to observing because usually sometime or let's say sometimes it was the case the last month or the last quarters that small caps in IWM are catching up later a little bit. So that's the reason why I built this little chart over here. I don't know if you can see the green line actually this is the ARC ETF I always watch ARC ETF how the performance is over there because we all know it's yeah high risk gamble stuff.

[00:14:58.26] - Speaker 1
Let's say it like this. If this is performing pretty pretty well or outperforms other sectors it's for me at least kinda a sign that we are risk takers. Yeah in stocks that we don't care about valuations or all that stuff. We just want to make money out of high beta stocks and this is the reason why the ARC ETF is in there as well. The performance is not that really good. So again that's a sign for yeah market participants yeah are more enjoying quality tech stocks over the time. Nevertheless if you are planning longs right now in SPX qqq you actually are yeah trading those tops. Right. That's not yeah really easy at least from my side especially with the stuff that's coming on over the week with NFP and all this stuff. So IWM today pre market we are already trading around 217 in the IWM 218 to 18 quarter one day max for today. That's also 2/24 highs. I would definitely look into set a few alerts but I want to see how we react to the data stuff this week. Of course you can always front run stuff right if you keep it technical.

[00:16:35.08] - Speaker 1
That's the reason we have the GEX charts on the right side for today and for Tuesday below mapping out important strikes like 215214 on the upside 218 220. This already gives you out some ideas where you can maybe set alerts and yeah buy calls set puts whatever your strategy is over there. The sku for the 25 Deltas on the left side looks pretty. Pretty yeah cheapish down there. Right. It's actually way way more cheaper than in May. And in May the IWM was like yeah the same, the same price area with 215218 something like this. Nevertheless if the week goes well and we don't have some yeah pretty pretty bad surprises out of data because if we have like mentioned it before NFP sub 100k IWM will suffer. Right. Should be on the sell side and should have a Negative performance over the week. So this is a little bit of the risk that you are taking. But nevertheless, if you want to front run this stuff at least use some data where yeah important inflection points in terms of price and in terms of positioning can be that you are not applying buying something.

[00:18:14.04] - Speaker 1
Yeah. Blindly without yeah. Preparation that's needed for it. And already the last slide for today. This is from last week actually what we are seeing here is nearly 14 range in CL include oil futures. This was yeah my main trade for the last month. Actually last month's performing wasn't that good. So now a little bit of yeah trading psychology stuff from my side. I decided then in the last month, yeah to keep it small, just focus on stuff that I'm really good at and understanding and I didn't had that much trades on but then the whole Iron Israel story had popped off right. Like two weeks ago. I'm sure everyone is now familiar with the stuff because it was social media, it was television and whatever else. So I decided to yeah write and do a little bit of extensive research about it. That's the reason why I put this little screenshot out of our Discord server over here. And yeah, long story short with CL trading around 78, 7077 does not make sense at all. Right. The market was pricing in here the worst outcome of the conflict that we have all witnessed which was long story short on the closure of water Straits mainly here, the Strait of Hormuz.

[00:19:59.16] - Speaker 1
That's the reason why we have these little pictures in the little screenshot over there. And I just decided to watch this conflict and as soon as Globex opened, which is yeah Sunday night here in Europe I was always at my screen with the stuff I have there observed the last days and I always decided to put a trade on. So yeah, and with the gap up from 22 June last week I was short. Yeah. And health was short down to $67 in crude oil and at the end of the month turned green. So sometimes you just have to sit and wait a little bit I guess. But yeah, one good trade can make your whole month a little bit better than you usually expect that your month will end. So that's from my side today. Short week, short presentation, 21 minutes. That's yeah a new record I guess. Something new or special? I don't think so.

[00:21:16.21] - Speaker 2
Yeah, let's see if there's any question guys. But if not. Yeah. Thank you Tim for this and to next week. We're going to be back on Tuesday after the bank holiday we're going to talk about crypto. So we're going to look at going to start the week with the macro update on looking at how crypto play at the level. And then we're going to have a lot of different sessions throughout the week on trading crypto on options on crypto. So there's going to be a lot of really cool stuff coming next week. So stay tuned, guys.

[00:21:48.02] - Speaker 1
Yeah, that's true.

[00:21:51.10] - Speaker 2
Thank you, Tim, for the time and see you guys soon. Good luck for this week.

[00:21:55.22] - Speaker 1
All right, thanks. And happy week.