TUESDAY MARKET UPDATE

Almost everything on my screen is red. The exception is the part that hurts most.

One more from Friday's tape. Tesla fell 6% because the robotaxi update underwhelmed. In a hardware cycle this big, the money rarely sits with the name on the box.

-Nathan Reed

GOLD SAT STILL WHILE EVERYTHING ELSE MOVED

Gold sits at $4,402 an ounce, down about two dollars. That happened on a day when a Saudi refinery was hit, diesel set a record, and the 10-year Treasury yield reached 4.794% — its highest since October 2023.

I walked through the oil-to-yields chain yesterday. Today the interesting part is what didn't happen. Gold is pinned between two forces of equal weight. Real yields near multi-year highs argue it belongs lower. A steady debasement bid — China's central bank has bought for 22 straight months — argues it belongs higher. Silver is doing the same nothing, holding above $66.

Standing still through a 21% drawdown and a geopolitical shock isn't weakness. It's two hands on the same wheel. Friday's inflation print takes one of them off.

DIESEL HIT A RECORD. REFINERS OWN THE CHOKE POINT

US retail diesel hit $5.85 a gallon, a record, past the peak set in June 2022. In February it was $3.76. Distillate stockpiles — that's diesel and heating oil — are the lowest on record for early September, and US refineries are already running at or above their stated maximum.

The market is trading this as a crude story — a war premium on Brent at $98.40 that unwinds when the shooting stops. That misreads where the shortage sits. Crude in a tank is not diesel in a truck, and a ceasefire does not build a refinery. Russia's export ban has disrupted roughly a third of global diesel export capacity, right as heating season starts. Diesel is the cost line under groceries, harvests and school buses.

What to watch:

"A rate hike can shrink demand. It cannot build a refinery. The Fed is bringing a thermostat to a plumbing problem"

EXXON, VALERO, TESLA

Exxon Mobil  $XOM ( ▼ 1.69% ) — led the energy complex before the bell as Iran threatened Gulf oil and gas infrastructure.

Valero Energy  $VLO ( ▲ 2.98% ) — one of the largest independent US refiners, and the most direct read on the diesel squeeze.

Boston Scientific  $BSX ( ▼ 2.07% ) — warned the August cyberattack will have a material impact on the quarter and the full year.

Tesla  $TSLA ( ▲ 2.07% ) — fell Friday after the robotaxi update disappointed and a federal safety probe was disclosed.

For real-time data, I recommend monitoring Finviz.

TARIFFS | Canada imposed counter-tariffs on roughly 700 US products overnight — 50% on steel, furniture and smartphones.

OIL | Houthi militants claimed a third strike on a 400,000-barrel-a-day Saudi refinery.

RUSSIA | Russia extended its diesel export ban and is now importing fuel from India and Kazakhstan.

INFLATION | Producer prices are forecast to accelerate Thursday, to 5.2% from 4.7% year over year.

EARNINGS | Oracle and Adobe report Thursday — the season's last real read on AI spending.

Three data prints between here and Friday. The boring one, Wednesday, is the one I'll be reading.

Nathan Reed | Profits & Insights