LATAM: Tensions Ratchet Up As US Sends Warships Towards Venezuelan Waters
Aug-21 14:22
Three US Aegis-class guided missile destroyers are set to reach the coast of Venezuela as soon as 24 August in what the US says is an essential fight against 'narco-terrorism'. In an incongruous political situation, at the same time, the first shipments of Venezuelan oil imported under a new license are set to arrive in US waters as soon as today in two tankers due to discharge at Port Arthur, TX and New Orleans, LA.
- CBS reports a Pentagon official confirmed "that the military assets had been assigned to the region in support of counter narcotics efforts. The official, who was not authorized to comment about military planning, said the vessels would be deployed "over the course of several months." US President Donald Trump has sought to utilise the military, rather than the Drug Enforcement Agency (DEA), to try to counter powerful drug cartels in Latin America.
- In response to the ships' movements, Venezuelan President Nicolas Maduro has said he will mobilise 4.5mln 'militiamen' in order to counter any threat to Venezuela's territory.
- Reuters notes that "The U.S. Treasury Department last month issued a restricted license to Chevron allowing the U.S. company to operate in the OPEC country and export its oil after a three-month pause triggered by more strict policies towards sanctioned Venezuela."
- Given the heightened political and security tensions, there are clear threats to the continued operation of the license, with the prospect that the Treasury Dep't looks to revoke the permission as part of any tightened sanctions package.
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EQUITIES: Chipmakers Undermine Majority of S&P 500 Stocks That Sit Higher
Jul-22 14:20
- Recapping the stocks move here - the European morning started weak to reflect the after-hours pull off highs on Wall Street, and that equity weakness is now making itself evident in US cash trade.
- As was the case this morning, tech names are the underperformers. The NASDAQ-100 is off as much as 0.78 vs. The +0.1% return in the Dow Jones as semiconductors are among the hardest hit.
- Much of this stems from the softer-than-expected outlook in the NXP earnings after the bell Monday - which many may see as a signal that chipmakers could have a rougher quarter than expected (NVIDIA relatively late in the quarterly cycle, on August 27th - so we should see plenty more information here). NXP are off 2.5%, feeding directly into Germany's Infineon Tech.
- It's not just the NXP earnings that are undermining sentiment - private firm FuriosaAI (seen as a potential NVDA competitor upon IPO) secured their first formal customer in LG in a pre-market press release.
- This makes for a lower headline S&P 500, despite 360 names in the index higher in early trade.
SONIA OPTIONS: F6 1x2 Put Spread Buyer
Jul-22 14:15
SFIF6 96.25/96.00 1x2 put spread, bought for 2.75 in 8k
FOREX: USDJPY Gravitates Lower Post Election, Trade Deal Optimism Noted
Jul-22 14:00
- A partial recovery overnight for USDJPY was swiftly shrugged off and the pair has resumed a steady downtrend since the European open on Tuesday. Price action echoes that seen on Monday in the aftermath of the upper house election in Japan, as PM Iishiba affirmed he would remain in office despite his party losing its majority.
- The extension lower for core yields has assisted this dynamic of yen outperformance, as both the trans-Atlantic tariff tiff and Bessent’s more optimistic tone for Powell’s future provide a supportive tone for treasuries. Furthermore, Bessent’s mention of Japan talks going “very well” and that the election may be the impetus to getting a deal done will have also provided tailwinds for the yen. His comments follow Japan’s chief trade negotiator meeting with the US Commerce Secretary on Monday ahead of the looming August 01 deadline.
- USDJPY has traded through initial support at 146.92 (Jul 16 low), printing session lows of 146.51 at typing. Short-term pivot support to monitor next is 145.85, the 50-day EMA.
- Some analysts had cited the substantial rally in USDJPY as overshooting the shift in fundamentals, and the subsequent cleaner positioning could be exacerbating this week’s swift reversal lower. Below the 50-day EMA, attention will be on 144.23, the July 7 low.
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