Russia/Ukraine 2022-Present
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Trading Desk Notes for August 1 , 2026
howestreet.com . Aug02 04:00Z
https://www.howestreet.com/2026/08/trading-desk-notes-for-august-1-2026/
mirrored for offline mesh reading
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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
There was very volatile short-term price action in the index and even more volatile price action in individual names and sectors. The volatility is due, in part, to over-leverage, momentum, crowding and concentration .
Here’s the S&P futures daily chart for the last three months: that’s choppy!
Nasdaq futures were weaker than the S&P due to a higher tech weighting.
The Momentum trade soared ~50% from March to June, but has “unwound” over the last 6 weeks.
AAPL – market cap down ~$600 billion from Wednesday’s record highs to Friday’s lows. AAPL had been a “haven” within the tech sector (as capital “rotated” to AAPL and away from falling AI stocks) with the share price surging ~24% from June lows to July highs, reaching a market cap of over $5 trillion. The share price fell after a poorly received Q2 report on Thursday, and fell further on Friday as capital “re-rotated” out of AAPL and back into the stocks that had been falling like a stone earlier in the week.
The MSCI South Korea ETF . Two memory stocks (Samsung and SK Hynix) “became” the index with millions of over-leveraged retail accounts bidding the index up by ~80% from April to June. The index gave back ~2/3 of those gains over the last 6 weeks.
SpaceX fell over 50% from the post IPO highs to Friday’s close.
CAT shares soared ~4X from the April 2025 lows to this June’s highs, then tumbled ~28% to this week’s lows. I saw CAT (providing power generation equipment for data centers) as a great example of the “picks and shovels” industries that benefited from the AI boom.
This week’s “defining moment” was the blow-up of Situational Awareness , a hedge fund that lost billions of dollars after making leveraged bets on AI tech stocks. (Google it; there are a hundred stories). Citadel scooped up the fund’s publicly traded shares at a discounted price, and that caused tech shares that had been falling like a stone to reverse and surge higher. The margin clerks sold the lows. Again.
Here’s a photo of the young man (he’s 24) who was running the fund. He was something of a legend in the AI world, but didn’t have much trading experience.
The FOMC did not raise short-term interest rates on Wednesday , and the 30-year bond yield soared to 20-year highs of ~5.28% by Friday’s close. Are the “bond vigilantes” testing the new Fed Chair?
Short rates had a more subdued reaction , with the December 3-month SOFR contract pricing rates 50bps higher by year-end.
Before the FOMC meeting, the market was pricing a ~30% chance that the Fed would raise rates. COT data showed that speculators in the currency futures markets were heavily long the USD (that positioning had been building for the past few months as the USD rallied), with the premium of US interest rates over most other currencies being a significant factor. The USD fell on the FOMC news and continued to fall further on Thursday and Friday.
The Japanese Yen soared in the Wednesday overnight market as the Japanese authorities intervened in support of the Yen, which had fallen to 40-year lows. The initial intervention saw the Yen rally ~200 points and then fall back ~100 points. Subsequent intervention (or perhaps short-covering) and reports that the NY Fed may have been involved (the FT reported that the NY Fed bought Yen against the Euro) created a second leg higher, with the Yen closing the week at 12-week highs.
I have written about a possible turn higher in the Yen several times over the past year. The Yen is down over 50% from its 2011/12 record highs against the USD, but I believe once it finally turns, it will begin a multi-year rally (rising against other currencies more than it rallies against the USD). Intervention over the last few years has temporarily boosted the Yen, but has not created a “durable” low because fundamental policies in Japan need to change. The government runs a huge fiscal deficit, and the BoJ keeps bond yields artificially low. A weakening Yen has been a “pressure valve” in this environment. If the new Takaichi government can demonstrate that Japan is on a “new path” and if repatriation flows begin, then the Yen may start a self-sustaining rally. I think there’s a good chance that “the lows have been made” this week (markets are forward-looking), but “real money” accounts will be cautious and slow to move.
NYMEX front-month WTI futures had fallen to pre-war levels around $70 in early July before surging to ~$93 over the next three weeks as US/Iran hostilities flared. (Brent futures hit a high of $102). WTI dropped as much as $15 from last week’s highs to Tuesday’s lows on hopes of renewed negotiations, but renewed hostilities caused prices to rally, and the market closed the week on the highs with Trump threatening “heavy” attacks on Iran this weekend.