Silver spikes, army takes power in Myanmar, and a huge week for the oil market.
Silver briefly traded above $30 an ounce this morning as the precious metal became the latest asset to get a boost from retail investor activity. While the futures market certainly got a bump, a lot of the buying seemed to be focused on getting physical supply, with sellers of coin and bullion overwhelmed over the weekend. There is an interesting subtext as Ken Griffin’s Citadel Advisors LLC – which injected cash into struggling Melvin Capital amid the GameStop Corp. short squeeze – is a major holder of the iShares Silver Trust ETF. It now looks set to benefit from the metal's rally.
Myanmar’s military detained Aung San Suu Kyi and declared a state of emergency for a year, voiding her party's landslide victory in November's election. Communications with the nation of 55 million people were spotty, with the country's stock market halting trading due to a connection error. The U.S., United Nations and European Union urged the military to respect the results of the election. There were further protests in Russia over the weekend, with 4,000 arrested as demonstrators demanded the release of opposition leader Alexey Navalny.
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The chief executive officers of Exxon Mobil Corp. and Chevron Corp. spoke about combining the two largest U.S. oil companies last year, Dow Jones reported. The talks were preliminary, and are not ongoing, according to the report. The news kicks off what is going to be a very busy week for the oil market, with almost every oil major reporting results. OPEC and its allies will review their December agreement on Tuesday, after a preliminary report estimated 99% compliance with output levels. Oil was trading slightly higher at $52.37 a barrel by 5:50 a.m. Eastern Time.
Equity markets are starting the month on a positive note after a disappointing end to January. Overnight the MSCI Asia Pacific Index climbed 1.5% while Japan's Topix index closed 1.2% higher. In Europe the Stoxx 600 Index had gained 1.1% by 5:50 a.m. with miners by far the best performers. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 1.074% and gold rose.
Canada manufacturing PMI for January is at 9:30 a.m., with the U.S. number at 9:45 a.m. and ISM manufacturing at 10:00 a.m. Minneapolis Fed President Neel Kashkari, Dallas Fed President Robert Kaplan, Atlanta Fed President Raphael Bostic and Boston Fed chief Eric Rosengren all speak later. President Joe Biden will meet with Republican senators in the White House today to discuss an alternative proposal on Covid-19 relief.
What we've been reading
This is what's caught our eye over the weekend.
And finally, here’s what Joe's interested in this morning
It's shaping up to be another huge week for the GameStop/WSB/retail trading story. The number one rule these days is that everyone, no matter how uninformed or uninterested, has to have a take. So here's a guide to lines you can use this week with friends, family and colleagues in order to make yourself sound savvy.
1. "Of course, longtime readers of Money Stuff won't be surprised at how this turned out."
This is key. Right off the bat, even though nothing is actually finished yet, immediately establish yourself as part of the Matt Levine club. Be sure to include the word *longtime*, so you have a leg up on whoever you're talking to.
2. "Is it really just retail on the long side of the trade?"
Of course, this is just a question, and you don't have the answer to it. But it implies that you are thinking about this a little bit beyond the normal framing. And maybe you have some darker thoughts about what's all happening here.
3. "Everything is securities fraud."
Say this jokingly, whenever the question of regulation and the SEC comes up. This is about bolstering Point #1 again. Being part of the Matt Levine club.
4. "Short squeezes are nothing new. What I'm fascinated by is the Gamma Squeeze."
You don't really have to understand this or know what a gamma squeeze is. Just mumble out something about option dealer positioning, and their need to hedge Robinhood trader options buying. (If you want to learn more, listen to Benn Eifert talk about it here.)
5. "If you really want to stick it to Wall Street, just buy and hold a Vanguard fund!"
Even Gawker said so.
6. "It's all fun and games until the DTCC comes calling."
You know who the final boss is on Wall Street. And you know that when the normally invisible aspects of market structure become part of the story itself that that can only mean trouble. If you add in something about T+2 settlement, you're in the clear.
7. "If it's free, you're the product!"
It's kind of a cliche to say that, but you can point out that while this basic framework has been applied to Silicon Valley products for years, it's a relatively new thing in the world of Wall Street, FinTech and free trading on Robinhood.
8. "Memes have always been part of trading. But what happens when the trading itself becomes the meme?"
This doesn't really mean anything. But the point is so open ended that it's good enough to move the conversation.
9. "I think it's outrageous that the media keeps characterizing WallStreetBets as high-school dropouts eating chicken tenders in their parent's basement."
Never miss an opportunity to sound self-righteous, moralizing and scolding. Point out some of the genuinely sophisticated businesses analysis done by The Roaring Kitty, or how much more they know about options trading on there than most people.
10. "In the end, Ken Griffin always wins."
Citadel is at the center of a bunch of conspiracy theories. But it doesn't matter because his firm handles so much of the incredible trade volume happening right now. Plus saying it this way establishes that you know about his history and rise to dominance.
(Note: I went on a podcast last week with Freddy Gray of the Spectator to talk about Gamestop et. al. And Freddy writes guides like the above for various events, so this was inspired by him.)
Joe Weisenthal is an editor at Bloomberg.
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