The Chinese equity market held up OK and fell a touch overnight, which was probably due to government buying in the equity market. The offshore dollar/yuan spiked but then reversed to end down a touch. Gold in yuan spiked to a new all-time high and then reversed to end down half a percent. Gold in other foreign currencies similarly spiked and then reversed but was hit much harder. Among the biggest losers were gold in euros, which fell 3 percent and was down 5 percent at one point, and gold in yen, which fell over 2 percent.

Elsewhere in Asia, I was actually surprised that the losses weren't bigger. Hong Kong fell over a percent. Japanese equities slumped 3 percent. JGB yields fell 12 bps to 1.35%. The dol/yen slumped over 2 percent to a new low for the year.

European equity markets were off over 3 percent this morning. German 10yr yields fell 7 bps to 2.64%. The eur/dol spiked 2 percent to a new high for the year.

Over in the US, the equity futures were off nearly 4 percent ahead of the open. The dollar was weaker vs. other paper. Gold was off 40 bucks despite the weak dollar, and yields were lower.

The S&Ps gapped down big on the open, and after a brief attempt at a reversal, the S&Ps rolled over and began slow collapse that would last for the rest of the session and sent the S&Ps out on the lows of the day with a loss of 5 percent.

Volume exploded. Breadth was nearly 8 to 1 negative on the NYSE and nearly 5 to 1 negative on the NASDAQ. New lows swamped new highs on the NYSE (547 to 53), and new lows swamped new highs on the NASDAQ (854 to 52).

Stocks Were Smoked:

Stocks were smoked across the board. Retailers with production in Asia were hit particularly hard for obvious reasons, but other GDP sensitive names that have nothing to do with tariffs were hammered as well. Case in point is the homebuilding garbage that I'm short.

Speaking of, the XHB homebuilding ETF fell 7 percent to a new 52-week low, and BLDR fell 9 percent to a new 52-week low.

Positions: I left my shorts unchanged in SPY, QQQ, MDY, IWM, ARKK, XHB, and BLDR.

Commodities Were Pounded:

Brent crude fell 5 percent to just shy of a new 52-week low. Natural gas rose 3 percent. The oil stocks were splattered, with the oil and gas ETFs all losing 8 to 11 percent. The uranium equities were also lower, with the URNM losing 3 percent.

Copper tanked over 4 percent. Other base metals were lower too, with the DBB base metals ETF fell over 3 percent. The copper stocks were hammered, with the COPX losing 7 percent. The steel stocks were whacked, with the SLX losing 7 percent. The XME metals and mining ETF fell over 7 percent.

Palladium fell 5 percent, and platinum fell 3 percent.

Silver was whacked for 6 percent and closed below its uptrend since the Dec 31 low.

The SLV/GLD ratio tanked 6 percent to its lowest level since the 2020 crash. As a side note, I should point out here that historically when silver is collapsing vs. gold, it tends to correlate with the gold stocks getting hammered relative to gold too, even though that obviously wasn't the case today.

The CCI equal-weighted commodity index ETF (GCC) tanked 3 percent and really looks to be potentially putting in a right shoulder of a H&S top now. The energy-heavy DBC commodity ETF fell 4 percent. The Bloomberg Commodity Index (DJP) fell 3 percent.

Gold Spiked And Then Slumped And Then Rebounded Again:

Spot gold spiked up to a new all-timer and to as high as $3166 overnight (although the futures interestingly failed to make a new high above their $3202 spike that occurred on the tariff news).

That pop marked the high of the day, and the metal proceeded to then slowly roll over and eventually slumped below $3100 to open around $3080 in the US for a loss of about $35 bucks.

The metal tumbled further and eventually hit a low of $3055 shortly before the equity open. Once the equity market opened, the metal took off like a scalded dog and ripped up to as high as $3136, which took the metal into positive territory.

That rebound marked the high for the US session, and the metal then reversed and slumped back to $3100 again before bouncing a little into the close to go out at $3114 for a loss of just over half a percent.

Gold Stocks Collapsed And Then Rebounded:

The GDX gapped down 4 percent on the open and then immediately sprinted to the upside. After rallying up into positive territory and to a new high for the week as the metal similarly rebounded, we hit a high around mid-morning and spent the rest of the session slowly sliding lower to eventually go out down a freckle and once again below the 5 dma, which means despite the intraday recovery in price the bears remain in control.

The GDX/GLD ratio spiked down to a new low for the move since the recent high and then rebounded to end up half a percent.

The silver stocks were much weaker than the gold names. The SIL fell 2 percent, and my own favorite gauge of the silver miners, PAAS, was spanked for 6 percent. The SILJ fell over 2 percent, and the GDXJ fell just a third of a percent.

Real yields were lower, and nominal yields were lower too. The yield curve steepened per the 2/10 spread. The dollar was weaker vs. other paper, but again I wouldn't be surprised if we now saw the dollar start to rally as equity markets plunge around the globe. Remember, everyone's debts are in dollars, which means you need dollars to pay them. I can recall in February of 2020 when the dollar was weak only to see it rip in March and send markets into the toilet in the process.

Gold and gold stocks admittedly held up OK today, but I wouldn't bet on that continuing. Bulls, especially new ones to the space, have become accustomed to buying dips in 2025 and being immediately rewarded so to see kneejerk panic-buying today is not a huge surprise.

Today was actually the first time this year that I can recall gold and gold stocks roaring back after a lower open and then not ripping to the upside and instead rolling back over. So, we'll see if those buyers get burned tomorrow or not (I think yes), but if they do, they will be much more hesitant to rush in like that on the next selloff.

Tomorrow, we'll get the jobs data, which should be another "so so" report I suspect (i.e. - not weak enough to justify the Fed easing yet), and then PowPow gives a speech on the economy at 11:25 ET. However, anyone hoping for him to promise easing is going to be very disappointed I think. The Fed moves slowly and it's always busy fighting the last war, which in this case is inflation.

The ongoing stock market crash will push the Fed to ease at its May 7th meeting I suspect, but they are going to fight that given the unclear inflation picture, which has been made even more murky by these tariffs. Eventually, the Fed will give in though, as they always do, once the equity pain becomes bad enough. That won't stop stocks from going even lower though. On May 2nd, we'll also get the April jobs report, which I suspect will be the first big stinker and with further cement a rate cut on May 7th.

With that in mind, one can put together a scenario where gold and gold stocks correct over the next couple weeks along with crashing equity markets around the globe and perhaps even a rally in the dollar, but that correction will then set up a moonshot to new highs once the Fed panics. All good things come to those who wait...

My gold model remained at neutral.

Positions: Short June gold at $3183. Long GDXD and long GDX 44 and 43 puts for Friday. I also added some GDX 45 puts for Friday after the GDX bounced the way it did. Long GLD 280 and 284 puts for Friday.

The Dollar Was Weaker:

The dollar was weaker vs. other paper, especially against the euro and yen. The dollar index tanked over a percent, but I'd watch out for a reversal to the upside, perhaps after PowPow fails to coo like a dove tomorrow?

Bitcoin rose half a percent and for once didn't trade like the QQQ 2x levered ETF. Maybe something is changeing? (I remain long IBIT; I don't trade it). MSTR, COIN, RIOT and other BTC derivatives were all splattered.

Treasury Yields Plunged:

Treasury yields fell 9 bps in the long end, which left the 10yr yield at 4.04%, and that move also broke the neckline of the massive H&S top on the charts.

The 2/10 spread flattened a little again. As the curve steepens after being inverted for an extended period of time, we typically start to see things go awry in the equity market ahead of a recession. That will bring on rate cuts eventually, which is what gold wants, but not yet.

Yields in the Fed sensitive 2yr fell 14 bps to 3.80%. Junk debt was hammered, with the HYG losing over a percent. LQD, which is the investment grade corp bond ETF, fell a hair.

To Sum Things Up:

I hear a lot of speculation about what if Trump reverses the tariffs then won't stocks recover. This misses the point. Firstly, Trump appears to be on a mission to reorient the global economy. He's not going to change these tariffs except maybe around the edges. Secondly, stocks going down will cause (are causing) a recession, which will cause the selling to feed on itself. It's not just tariffs that are weighing on stocks; overhead supply is biggest problem that stocks have, and the decline in equities will push the smaller real economy into recession.

Let's be careful out there...

REMAIN FLEXIBLE