This morning was a test of whether the Fed’s first cut in years would keep its shine. Futures pointed lower on the open, with investors nervous about forward guidance, sticky inflation, and the risk that small caps might not keep pace with tech leadership. The T&Q desk also flagged AI expansion, gold strength, and looming Fed speeches as the main drivers.

By mid-afternoon, the tape told the story. The S&P and Nasdaq pushed higher, led by Nvidia, Apple, and Tesla, with Goldman Sachs hiking its S&P 500 year-end target to 6,800. Gold ripped to fresh highs near $3,750, while yields hovered just above 4.10% and the dollar eased. Risk sentiment was upbeat but hedged… investors clearly like the cut, but safe-haven bids show they don’t trust it fully.

Policy noise stayed thick. Trump’s surprise $100,000 H-1B visa fee rattled Indian tech stocks, reminding traders that politics can cut against the macro tailwinds. With PCE data and a slate of Fed speakers coming this week, today’s action looked like investors front-running good news while still paying for insurance. The rally is alive (but the safety net is gold, not bonds.)

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A particularly meaty piece today, with a deep dive into the true nature of gold.

Inflation’s stickiness, geopolitical rifts, and the fading comfort of the 60/40 portfolio are forcing investors to rethink hedges. D.E. Shaw’s research team delivers a rigorous answer in Worth Its Weight: a modest allocation to gold can materially improve portfolio resilience. The quant powerhouse frames gold not as a speculative bet but as a “non-productive store of value” that still earns its keep.

The secret lies in gold’s dual nature. Over centuries, it has a “long-term relationship with global wealth growth”. Effectively, gold preserves purchasing power as economies expand. But in the short and medium term, it stands apart from stocks and bonds. Near-zero correlation means it often zigzags against other assets, especially in crises. When the firm ran optimization models, gold emerged as particularly “appealing… during periods of inflationary shocks, geopolitical uncertainty, and positive stock-bond correlation.” In other words: when everything else sells off together, gold’s utility spikes.

The researchers are candid that gold won’t make you rich: it has no yield, offers no productivity, and can languish flat for years. But in an era when U.S. dollar primacy is being tested, trade blocs are splintering, and inflationary surprises remain a threat, their conclusion is clear. Gold deserves a permanent, if modest, slot in diversified portfolios. This isn’t gold-bug cheerleading…  it’s a sober, data-driven case from one of the world’s top quant firms.

On Forward Guidance, veteran petrochemical analyst Paul Hodges warns that the global chemical sector is in its deepest slump since the early 1980s… and markets are ignoring it. Demand for the base chemicals that feed everything from plastics to electronics has “collapsed,” with European output down ~15%, U.S. producers slashing capacity, and China stagnating despite reopening.

Hodges calls chemicals the true canary in the coal mine: in 2008 and 2020, orders cratered just before GDP and manufacturing did. Yet today, investors remain fixated on tech-driven consumer resilience, leaving this ghost signal overlooked. His message is blunt: physical economy weakness eventually bleeds into profits and markets.

For contrarians, the takeaway is clear: position for a manufacturing-led slowdown. That could mean leaning short on cyclicals, looking long at defensives or bonds, and bracing for ugly surprises in PMI data and earnings. Hodges’ insight is a reminder that while AI and mega-cap growth hog headlines, the chemical industry is quietly screaming “hard landing.”