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The close
Wholesale inflation accelerated. Crude went up 6.9%. And gold fell 1.7% anyway.
Read that second sentence again, because if you own gold for exactly this scenario, today was the day it was supposed to do its job, and it didn’t. Stocks closed lower for the fourth session running. That’s the tape. The gold print is the part we’d sit with tonight.
One note before the numbers, because two sets of closes are going around today and they don’t agree. The closing quotes we’re using put the S&P at 7,592.80, down 43.56. The wire’s unofficial close is 7,590.44, down 45.92. That’s 2.36 points between them, about three hundredths of one percent. Same thing on the ten-year: 4.953% in our tables, 4.93% on the wire. We’re using the first set for every index level and every yield in this letter, straight through, so nothing here is spliced together from both. Where we quote the wire, its numbers stay inside its own quotation marks and we don’t reconcile them against ours.
Wholesale Inflation Accelerated, And So Did Crude
The macro headline, from the wire, as it ran:
“US WHOLESALE INFLATION ACCELERATES TO 5.4% IN AUGUST, WHILE FED RATE-HIKE ODDS RISE TO 72% AND THE 10-YEAR TREASURY YIELD CLIMBS TO 4.93%, NEAR ITS HIGHEST SINCE 2023.”
And the market’s response, also from the wire:
“WALL STREET FALLS FOR A FOURTH STRAIGHT SESSION AS BRENT CRUDE TOPS $105 AND US CRUDE EXCEEDS $100 ... AMID RISING INFLATION FEARS.”
Today is producer prices. Tomorrow is CPI, and the weekend letter had that calendar right. We’re not going to guess at the print, and anybody who tells you they know it is guessing too.
September 10 close. Natural gas has a percentage but no point change in front of us, so that cell reads n/a rather than a guess.
Brent finished at 108.07, up 6.8%. WTI closed 102.70, up 6.9%. Tuesday’s letter ended with Brent at 98.85 and the line “That story has not finished.” It hasn’t. We didn’t publish Wednesday, so don’t subtract those two numbers and call it a day’s work; that’s two sessions of ground.
Gold is the odd one out and it’s the reason this letter exists. On a day wholesale inflation accelerated, rate-hike odds went to 72% and crude ran almost seven percent, the metal people buy for inflation closed down 75.78 at 4,324.45. GLD, the fund, was down 1.73%, which lines up. Tuesday’s letter had gold at 4,357.60 and called it the more interesting of the two metals-and-oil facts. It’s lower again now.
We’re not going to give you a tidy reason. The honest version is that gold has spent this week going down on days that should have suited it, and the dollar and the bond market both had something to say about that.
The Dollar Was Firm And Bitcoin Wasn’t Spared
The dollar gained on all three of these. The yen weakened half a percent, the euro gave up two tenths, sterling three. Bitcoin fell 1,168.98 to 77,134.91, down 1.5%, and IBIT was down 1.42%, which is close enough to the same thing.
So the two assets people reach for when they don’t trust paper money both went down on the day paper money looked worse. That’s not a prediction, it’s just what happened, and it’s the second time this week we’ve printed it.
The Missiles
This ran on the wire today and we’re reporting it exactly as reported:
“YEMENI ARMED FORCES LAUNCH MISSILE ATTACK ON SOUTHERN SAUDI ARABIA”
Saudi civil defence put out an emergency alert for Khamis Mushait and Abha, and later said the danger had passed.
That’s the whole of what we know. We’re putting it in the same letter as a seven percent day in crude because both things happened today and you should see them both. We are not telling you one caused the other, we’re not forecasting what comes next, and we’re not going to price a war we can’t see. Anyone doing that on your timeline this afternoon is selling something.
The Scorecard
Four indices, all red, and the growth end took the most. The Nasdaq 100 lost 1.1% and the Russell 1.0%, while the S&P and the Dow both gave up six tenths. Nothing here is a rout.
The VIX is the line that moved. Up 9.4% to 18.01, the biggest percentage move on this table by a distance. Tuesday’s letter printed it at 15.63 and closed with the thought that the Gulf risk “is not priced by a 15.63 VIX.” It’s 18.01 now, and we didn’t publish Wednesday, so that’s two sessions of repricing rather than one. Even so, 18 is still inside the fourteen-to-twenty band we’d call ordinary. Awake, not alarmed.
The Sector Board
Two of the eleven finished green, Communications at six tenths and Staples at one. Technology was the worst at 1.4%, with Materials next at 1.2%, and the whole board spans exactly two points from top to bottom. That’s a narrow, orderly down day dressed up as a scary one.
Now the row worth stopping on. Energy closed down 0.6% on a day WTI rose 6.9% and Brent rose 6.8%. Level with Health Care, right in the middle of the eleven. The commodity moved and the equity didn’t follow it.
There are a few ordinary explanations, and we can’t pick between them from a single day’s percentage. What we can say is that if you were long energy shares as your inflation hedge, today paid you nothing, and if you were long gold as your inflation hedge, today cost you. Two hedges, one hot inflation print, zero help.
The Chips Took It
The six worst on this board are all chip names. Intel down 5.60%, Micron 4.91%, Sandisk 4.08%, Marvell 3.42%, AMD 3.35%, NVIDIA 2.37%. Then the board goes quiet: nothing else on it fell more than 1.73%.
And Apple rose 3.57%.
That’s not a market selling everything on an inflation print. That’s money coming out of one industry and going somewhere else inside the same index. The sector board agrees with it: Technology last at 1.4%, Communications first at plus six tenths. If you only read the index number today you’d have missed the entire day.
We hold none of those chip names outright, and we’re not going to pretend to know why Intel was down 5.60%. What we do know is that the Nasdaq 100 fell 1.1% while Apple rose 3.57%, which tells you how heavy the damage was underneath the index number.
The Price Of Money
September 10 close. The change column is measured against the levels printed in Tuesday’s letter, which is two sessions back because we didn’t publish Wednesday. It is not a one-day move.
Tuesday we wrote about a thirty-year that wouldn’t budge off 5.249% through an afternoon with a shooting war in it, and said that was the version of the rates argument that should bother you. It has budged. Two sessions later it’s 5.362%.
The whole curve went up and it didn’t twist much. One year to thirty is 109 basis points today; Tuesday’s letter made that gap 111. So this isn’t the bond market pricing a recession or pricing a panic. It’s the bond market repricing the level of everything, front to back, and the biggest two-session move on the US curve sits in the five year at nearly eighteen basis points. The five year is where a rate-hike argument would show up first, and the wire has hike odds at 72%.
Every ten-year on that table went up. Japan’s went up two basis points and the other four went up fourteen to twenty-one, which is not the same event. Britain is the most expensive borrower on this list at 5.379%, and it now pays 43 basis points more than the United States, against 38 on Tuesday. America pays 145 more than Germany and 204 more than Japan for the same ten years.
Friday’s letter made this argument and Tuesday’s repeated it. Today the equity market finally acted like it heard. The ten-year at 4.953% is a real number for a real alternative, and the wire calls it near its highest since 2023.
Credit Was Fine, Duration Wasn’t
All six red, and the spread from best to worst is nine tenths of a point. Tuesday four of these six finished within three cents of unchanged. Today all of them moved, mildly.
The interesting pair is HYG against LQD. If today were a credit scare, the junk would be worse than the investment grade. It’s the other way round, 0.4% against 0.9%, and the simplest reading is that this was a rates day and LQD carries more duration. Convertibles were worst at 1.3%, which makes sense for the thing on this list with the most equity in it, on a day equities fell.
TIP down four tenths on a hot producer-price print is the one that looks backwards until you remember TIPS are still bonds. Rising real yields hurt them regardless of what the inflation number did.
Around The World
Korea fell 4.2%, the worst on this board and 1.7 points worse than the next one down. The six worst names on our single-stock table are all chip companies. We’re putting those two facts side by side and letting you do the rest.
Emerging markets lost 2.2% against developed-market EFA’s 0.8%, which is 1.4 points of daylight on a day the dollar was firm and US yields rose. That’s the old, boring emerging-market equation and it still works.
Brazil was the only green square on the board, up 1.3%, on the same afternoon crude ran almost seven percent.
Trusted Voices
Only what was actually posted today, quoted as it ran. Where a post was cut off by the page we either quote to the cut or leave it out, and today we left a couple out rather than finish somebody else’s sentence for them.
Here’s what’s interesting about today’s crop. The tape spent the session pricing inflation. Two of the three people below are arguing the demand side can’t support it.
Danielle DiMartino Booth. Three hours ago:
“Absent purchasing power, to WHOM do companies charge higher prices? (See any consumer-facing’s earnings comments…then reference their accompanying layoff announcements.)”
And four hours before that, on weekly retail spending data:
“Got inflation-adjusted? @ChicagoFed Advance Retail Trade Summary (CARTS) tracks @uscensusbureau Monthly Retail Trade Survey (MRTS) on weekly basis, providing early snapshot of national retail spending. Latest week in the red. The Consumer is Strong!”
That last line is sarcasm and it matters that you read it that way. She’s pointing at retail spending in the red and then saying the opposite of what she means. Take that sentence out of its paragraph and you’d have her arguing the exact reverse of her own post, which is why we’ve run the whole thing.
Henrik Zeberg, six hours ago, and this one reached us as a repost from DiMartino Booth rather than as her own words:
“Observe guys! Do not get fooled by the ‘inflation-coming-narrative’.”
A repost is amplification, not authorship. We’re attributing the line to Zeberg because he wrote it, and we’re not going to tell you she endorses it, because a repost doesn’t say that.
Set those against the day. Wholesale inflation accelerated to 5.4%, hike odds are 72%, the ten-year is near its highest since 2023, and stocks fell a fourth straight session on inflation fear. Zeberg says don’t be fooled by the inflation narrative. DiMartino Booth is asking who exactly is supposed to pay these higher prices when spending is going backwards and the layoff notices are stacking up.
We’re not refereeing that. Both readings can’t be right and one of them is about to be tested. Tomorrow’s number is the referee, not us.
Yuriy Matso, three hours ago, on the four-hour chart of ES futures:
“Bull Trap in place. Larger drawdowns are likely if ES drops below 7327.”
That’s a checkable level, which we like, so let’s check it. His 7327 sits about 3.5% below where the S&P closed today at 7,592.80. One caveat and it’s a real one: he’s talking about the futures contract and our tables carry the cash index, and those two don’t print the same number. Treat 3.5% as the neighbourhood, not the tick. Either way, four down sessions have not got us anywhere near his line yet.
What We Did
We sold puts into this. Both tickets went out as their own alerts this morning with the full detail, so this is the short version.
Portfolio 1 added a GLD October 16 396 put and took in $1,010, on the gold weakness described at the top of this letter. That sits alongside a December 18 395 put the book has held since August 26. Same idea, shorter clock, and if gold keeps sliding we end up owning the metal at prices we chose on purpose.
Portfolio 2 did something smaller and, honestly, more useful to learn from. A QQQ 708 put expiring today got bought back at mid-morning for a scratch, sixty-five cents, and the money went straight back out to the September 16 698 for $240 net. QQQ closed the day at 708.58, down 1.08%.
Battista’s own words on it, and we’re not putting them in ours:
“That’s short dated, short premium working to your advantage, Long Delta market down no loss.”
There’s a whole education in that sentence for anyone selling premium. Short-dated options bleed time value fast enough that a down day in the underlying doesn’t automatically hand you a loss on the short put. That’s the trade-off you accept when you give up premium for a shorter clock, and on a day like today you get paid for it.
Bottom Line
That’s the close, written in the hour after the bell. Four things from today, in the order we’d rank them.
Gold is the story and it isn’t a comfortable one. Wholesale inflation accelerated to 5.4%, crude ran 6.9%, rate-hike odds went to 72%, and gold closed down 1.7%. If you hold the metal as inflation insurance, the policy just didn’t pay on a covered claim. That’s worth more of your evening than the S&P’s forty-three points.
The selling was narrow. Six chip names took the damage, Apple went up 3.57%, two sectors closed green, and the whole eleven-sector board spans two points. Four straight down sessions sound worse than what actually happened underneath them.
Rates are the pressure and they’re global. The US ten-year is 4.953%, the thirty-year has moved 11 basis points in two sessions after refusing to move at all on Tuesday, and Britain, Italy and Germany all went the same way. Japan’s barely moved. Credit didn’t break, but longer paper got hit harder than junk did, which tells you this was about the price of money and not about anyone’s ability to pay.
And two people we read think the market has the inflation story wrong. CPI is tomorrow. We’re not forecasting it, we’re not positioning for it, and we’d rather sell premium into the uncertainty than pretend we know the number.
Disclaimer
This is not investment advice. Nothing in this letter is a recommendation to buy or sell any security. Grow Your Pile and Squared T Capital publish what we do in our own accounts for education. Options involve substantial risk and are not suitable for every investor. A short put can require you to buy stock at the strike price and can lose more than the premium collected. Past results do not predict future results. Do your own work and consider speaking with a licensed advisor about your circumstances.
Past performance is not indicative of future results, and results shown are those of our own accounts and are not representative of any subscriber’s results. Read the Characteristics and Risks of Standardized Options before trading.
Tony Rihan and Tony Battista Grow Your Pile
Every options trade in all three portfolios is published, win or lose, with entry, exit and running P&L at growyourpile.com.