US: Viewpoint-How Long Is Too Long For The Straits Of Hormuz To Remain Closed ?

The S&P(ESH6) Friday night range was 6808.75 - 6897.75, SPX closed +0.05%, Asia is currently trading around 6854. The S&P(ESH6) chopped sideways as risk stabilised into the weekend and the inflation data came in pretty benign. The stock market continues to look stretched up here but recently these dips have been strongly supported so it has not paid to chase them, at some point this will change. US Yields continue to move lower so the market believes we will get cuts sooner than later. This morning futures have opened a little higher, E-minis(S&P) +0.05%%, NQZ5 +0.05%. On the day, it should be quiet with both the US and China out, the market continues to chop wildly sideways for the moment in this 6700-7050 range, albeit with a heavy tone for the moment. The first resistance is back toward the 6910-6940 area, the bears will be hoping for a test of the 6700-6750 support, a break of which could signal a deeper pullback toward 6500. Only a sustained close back through 6500 would see the strong uptrend potentially challenged.

• Oguz Erkan on X: “Dario Amodei perfectly explains why $ORCL and OpenAI are in a very risky position. He says you can commit to buying $5 trillion worth of compute if you are projecting a $1 trillion revenue run rate. If you achieve $800 billion, it’ll still be staggering, but the company will go bankrupt. This is the risk OpenAI is facing. If its revenue projections are off even by a bit, it will struggle meeting its commitments. And that will directly affect $ORCL as most of its backlog is from OpenAI.”   https://x.com/oguzerkan/status/2022569086467686875?s=20
• Holger Szchaepitz on X: “The AI-driven productivity take-off may finally be visible, Erik Brynjolfsson says. New data released this week challenges the narrative that artificial intelligence has yet to meaningfully impact the broader US economy. While earlier reports pointed to steady job growth, revised figures show that payroll gains were marked down significantly. Importantly, this revision came even as real GDP remained strong. Producing more output w/fewer workers is the classic signature of rising productivity. Brynjolfsson estimates US productivity growth at around 2.7% for 2025 – nearly double the sluggish 1.4% annual avg of the past decade. ft.com/content/4b51d0” See Graph below.
• SpotGamma on X: “ The S&P 500 may appear calm on the surface, yet index-stock dispersion has increased dramatically and SPX has now slipped below the critical 6,900 level. With put skew rising and VIX expiration ahead, volatility risk is building.”
• The S&P 500 Index Average True Range(ATR) for the last 10 Trading days:  95 Points

Fig 1: Payrolls Revised Down

Source: MNI - Market News/Bloomberg Finance L.P/@Schuldensuehner

• MNI JAPAN Q4 REAL GDP +0.1% Q/Q; MNI MEDIAN +0.5%
• JAPAN Q4 REAL GDP +0.2% ANNUALIZED; MNI MEDIAN +2.0%
• JAPAN Q4 GDP POSTS FIRST GROWTH IN TWO QUARTERS
• JAPAN Q4 CONSUMPTION +0.1% Q/Q; +0.1 PP CONTRIBUTION
• JAPAN 2025 GDP RISES 1.1% Y/Y VS. -0.2% IN 2024

The weekly CFTC positioning update showed mixed trends between leveraged and asset manager contracts with respect to the USD. The leveraged contract bias was clearly against the USD. Only NZD and CHF saw modest net selling for leveraged contracts in the week ending Feb 10 (last Tuesday). In contrast, on the asset manager side, trends were more mixed, with JPY and GBP selling, but buying for EUR and AUD, along with CAD

• For USD/JPY, we didn't see a significant shift in net aggregate positioning, as net buying via leveraged contracts was largely offset by net selling in the asset manager space. Since mid Jan, the leveraged outright short has been roughly cut in half (from beyond -100k), while asset manager longs are down modestly. We may have seen a further curtailing in leveraged yen shorts as last week unfolded, given USD/JPY price action continued to correct off highs. Support for yen came via calming rhetoric from the Takaichi regime around the fiscal outlook (post the LDP's strong election victory), along with weaker US yields.
• Elsewhere, EUR/USD net longs were added to even as EUR/USD couldn't revisit late Jan highs above 1.2000.
• AUD/USD has the largest net longs in the leveraged space, while asset managers continued to cut back on shorts. The A$ is looking to consolidate its break above 0.7000. 

Table 1: CFTC FX Positioning Update - Weekly Change & Outright Positioning (As At Feb 10)  

Source: CFTC/Bloomberg Finance L.P./MNI