Yo Pit Crazies,

It takes one Fed guy to mess up the plot.

This time it was Governor Waller, who said he'd support holding rates this month if the next two weeks of inflation data cooperate.

Stocks read that and pushed the S&P 500 Trust ETF (SPY) up almost half a percent and option prices got cheaper across the board.

Mind you, the number isn't out yet, and I don't see much that's "disinflationary" lately.

Diesel crack spreads are near record levels and services inflation isn't budging. What was a 65/35 proposition on a September hike is quickly falling toward 50/50.

The next inflation number hits Sep 11th at 8:30 AM, five days before the Fed meets.

That's quite an all or nothing setup.

Oil Might Do the Fed's Job for It

None other than Goldman Sachs says Persian Gulf oil exports are back to two-thirds of prewar levels.

That's still less than what we need, but it's a comeback, and Goldman has Brent finishing the year near $80 from $95 today.

This might be a good place to short some oil majors, and we did a little of that in Cap Gains today.

Between that news and the Fed leaning on the next inflation report, you'd think there would be a market reaction. Well…

Somebody Sold the Whole Vol Curve Again

SPX skew move in the Skew-O-Later, September 3 the close

My Skew-O-Later is available from Edge Hunter. What it shows is subtle: the left side of the SPX curve at 30 DTE (options expiring 30 days out) dropped more than the right side. Puts in the SPX got cheaper than calls, but both got cheaper (the gap between the two is skew, and it's what traders pay up for crash protection versus upside).

It also shows the big negative in the market is rates, but more so how much the government is spending us into poverty, and Congress doesn't care. What traders still like is growth. Take a look at Snowflake, a Ceres Club stock: it beat on earnings, grew revenue 35 percent, and the stock jumped more than 20 percent Thursday.

Fast forward to next week and Anthropic could go on the road. Look for lots of pockets of activity there. Mark goes live Friday to set it up.

I'm guessing this week is the low for VIX until the September 16 expiration, which also happens to be Fed day. It sets up perfectly for my Two Way Trades on Sep 9, going into the Sep 11 inflation report.

Yesterday, I said three things could change in the short term to crush VIX, and they'd be a surprise.

We got two of them.

Hope this was helpful,

Andrew Giovinazzi