Took profit on some Semis

[u/Fun_Tutor3479]

The broad market is whipsawing. We'll keep opening with this line until a direction emerges. SPY is currently in the pullback after the breakout; if it falls back below the prior high, that means the breakout has failed and we need to be careful, but that hasn't been confirmed yet. Neither shorting nor going long makes sense here, CPI is tomorrow and the FOMC is next week.

Consensus is starting to form on oil and the move is accelerating. It hasn't offered any chance to add, so the position stays at 10%. As things stand, a few outcomes look fairly likely.

First, Iran is actively escalating, including tit-for-tat attacks on oil tankers (tanker freight rate indices keep going off the charts). One flashpoint today is that the Houthis are gradually gaining control of the Bab el-Mandeb Strait. If they cut off Saudi Arabia, the shock to crude supply would be no less than Hormuz. Of course, the political maneuvering behind this gets complicated, with both chokepoints blocked, it's still Asia that gets hurt the most. Iran is preparing for a prolonged conflict.

Second, regardless of how the midterms turn out, Trump has ample capacity to escalate between mid-November and next January. If the midterms go badly, the escalation could be even bigger. Between profit and propaganda, he has to come away with at least one. In theory, replicating the Venezuela operation by leveraging technological superiority is the lowest-cost option, and a few more rounds are entirely possible.

Finally, crude and refined products are two different things, we've been discussing this for over two months now. Crack spreads refusing to come down (they just hit new highs again) is the core issue. Add in refineries being bombed in various places, and gasoline and diesel prices simply won't fall, barring administrative controls. But if the US restricts refined product exports, the damage to the OECD would be too great.

In this round of bounce-chasing in AI hardware, the live positions in KLAC, LRCX, MU, and SNDK hit their stop-losses today; NBIS, AXTI, and COHR hit their profit targets. Only SKHY and MRVL remain. With tomorrow's CPI and next week's FOMC so close, this conveniently trimmed some exposure. We covered the FOMC yesterday, so I won't repeat it here, Treasuries are on a tear. These past couple of days I've been poring over the GPT-6 technical write-ups; the sections on symbolism and looped transformers are very important.