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Don Kaufman here. |
So let me get this straight. The Dow rips 600 points because Trump decided to kick the EU tariff can down the road, and suddenly everyone's acting like we just cured cancer? |
Give me a break. |
Look, I get it. There's news. Yes, there was news. But here's what's actually happening while CNBC is throwing confetti... |
My Market Maker Buddy Is Ready to Quit (No, Really) |
Over the weekend, I'm talking to some of the guys who actually MAKE markets – you know, the people who provide the bids and offers that keep this whole circus running. |
And one of them tells me: "Don, we don't want any portion of this anymore." |
These guys are literally saying "forget it" to making markets because they're tired of getting their faces ripped off by surprise tweets at 3 AM. |
I'm not kidding – some market making firms have taken significant financial hits just because of announcements. Their entire year can vanish on a whim. That's not exactly what you'd call "stable market conditions." |
And when I see bid sizes dropping from hundreds of contracts down to single digits? Yeah, that's not normal. That's "holy crap, nobody wants to play this game anymore" territory. |
The Expected Move Is Having a Nervous Breakdown |
Okay, here's something that'll blow your mind. You know how the market is supposed to be smart at pricing risk? |
Well, in the last five weeks, we've shattered our expected moves FOUR out of five times. |
Let me translate that: The smartest product in the market – SPX options – is basically screaming "WE HAVE NO IDEA WHAT THE HELL IS GOING ON." |
This week's expected move? $127. In a FOUR-day trading week. Last week was $100 in a FIVE-day week. |
So we need 30% more volatility with one less day? The market is literally telling us it can't handicap risk anymore. And that, my friends, should scare you. |
About That "Massive" Rally... |
Sure, the S&P popped +100 handles this afternoon. Looks impressive on your screen, right? |
But here's the thing nobody's mentioning: We traded near 6,000 in the S&P futures just the other day. Today we're sitting at 5,915. |
So this isn't some triumphant return to glory. We're still a hundred handles off our highs. This is like celebrating because you only lost $900 instead of $1,000. |
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The EU Tariff "Crisis" That Wasn't |
Let me ask you something. What exactly do we import from Europe that we absolutely can't live without? |
I've been racking my brain on this one. BMW? Nah, Tesla builds in Germany to avoid tariffs anyway. Olive oil? Come on. Wine? I'm a Tennessee whiskey guy. |
The only thing I came up with is machine tools from Germany. That's it. That's the entire "crisis." |
Yet the market tanked last week and ripped today over... what exactly? The ability to keep buying overpriced handbags made by Chinese workers in Italy? |
(Yes, that's actually a thing. Look it up.) |
Meanwhile, at Casa Kaufman... |
Speaking of reality checks, my daughter had a "friend" over this weekend. Six-foot-tall, 180-pound "friend" who's 14 years old. |
Kid walks in the house and immediately looks terrified. My daughter asks him what's wrong, and he says, "I'm pretty scared of your dad." |
I go, "I didn't even do anything yet." |
He says, "You look like you're gonna do something." |
I kinda liked him after that. The fear was palpable. Good instincts, kid. |
But here's the kicker – this giant teenager is bigger than me, and he's still scared. Know why? Because sometimes the appearance of danger is more powerful than actual danger. |
Just like this market. |
The Trade Nobody's Talking About |
While everyone's buying the "tariff relief" narrative, I'm making a different bet. |
I've got a bearish position in FXI because I think China's about to start tweeting back. They've been quiet for 30 days into their 90-day reprieve. That silence is deafening. |
And here's my contrarian play: I'm getting ready to go LONG the US Dollar. |
Why? Because literally everyone is short it right now. When the whole world is leaning the same direction, that's usually when the boat tips over. The violence I'm seeing on small bounces tells me there are a lot of leveraged firms about to get their faces ripped off. |
The $96,000 Reality Check |
Oh, and here's your daily dose of "the world has lost its mind": USC now costs $96,000 a year. |
Ninety-six thousand dollars! Jeff Bierman went there for grad school in the '90s and paid maybe a quarter of that. |
You know what I told my kids? Give me $50,000 to start you a business instead. At least then you might learn something useful. |
This is the same bubble mentality I'm seeing everywhere. Overpriced, overhyped, and everybody pretending it makes sense. |
What This Actually Means |
Look, I'm not trying to be a downer here. But this market is trading from tweet to tweet with zero underlying foundation. |
Volume is pathetic Liquidity is disappearing Everything moves in perfect correlation (which is weird) Market makers are literally walking away
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When you have these conditions, it doesn't take much to move prices dramatically. |
Today's rally isn't strength – it's amplified noise. |
That's why I'm sticking to this strategy. |
The Bottom Line |
Don't get fooled by the green screens today. This isn't sustainable strength. This is artificial life support powered by low liquidity and panic covering. |
The smart money isn't celebrating. They're preparing for what comes next. |
And trust me, what comes next is rarely what everyone expects. |
To your success, |
Don |
P.S. – I'm doing a special Catapult session this Thursday. We'll talk about how to trade these schizophrenic markets without getting your head taken off. Because the old rules? Yeah, they don't work anymore. |
P.P.S. – If anyone has suggestions for what we actually NEED from Europe, I'm all ears. So far I've got machine tools and maybe some Scotch. That's it. |
