October 26th, 2025 | tastylive's First Call

Here's a comprehensive summary of the YouTube video transcript:

Key Concepts

Weekend Wall Street: An IG product tradable overnight when markets are closed, used to approximate opening prices.
Risk-On Sentiment: A market condition where investors are willing to take on more risk, leading to higher prices in assets like gold, silver, and Bitcoin.
Contrarian Trader: A trader who takes positions opposite to the prevailing market sentiment.
Short Premium: A trading strategy that profits from the decay of option premiums over time.
Implied Volatility (IV): The market's expectation of future price fluctuations of an asset.
PCE (Personal Consumption Expenditures): A key inflation indicator.
Fed Meeting: A scheduled meeting of the Federal Reserve to discuss monetary policy.
Mag Seven: A group of seven large-cap technology stocks (Apple, Microsoft, Google, Amazon, Nvidia, Meta, Tesla).
Calendar Call Spreads: An options strategy involving buying a longer-dated call and selling a shorter-dated call with the same strike price.
AI Supernova: A term used to describe the rapid and significant growth and adoption of Artificial Intelligence technology.
Debasement Trade: An investment strategy that seeks to profit from the perceived devaluation of a currency.
TLT: An ETF that tracks the iShares 20+ Year Treasury Bond ETF.
Fed Funds Futures: Financial contracts that allow investors to speculate on the future direction of the Federal Reserve's target interest rate.
Summary of Economic Projections (SEP): A report released by the Federal Reserve detailing their economic forecasts and interest rate expectations.
Event Risk: The potential for a specific event (like an earnings report or a central bank announcement) to cause significant market volatility.

Market Overview and Sentiment

The transcript opens with a discussion of a strong "risk-on" sentiment observed in the market, with gold, silver, and Bitcoin all moving higher. This suggests a general bullish outlook. The speakers note that equity markets are also expected to open higher, referencing the "Weekend Wall Street" product as an indicator.

Weekend Wall Street and Overnight Markets

The "Weekend Wall Street" is introduced as an IG product that trades overnight when regular markets are closed. It's described as a useful, though not always perfect, tool for gauging opening price movements. The discussion touches on the increased liquidity in overnight equity markets, particularly during periods like COVID-19, 2022, and 2021. There's a sense that this heightened overnight activity might be returning.

All-Time Highs and Contrarian Trading

The market is at all-time highs, which, paradoxically, can be frustrating for contrarian traders who profit from two-sided action and volatility. The current environment of straight up-and-to-the-right moves and instant dip-buying makes it difficult to capitalize on volatility. The S&P 500, Dow, and Nasdaq have reportedly been up for six consecutive months, with a potential seventh month on the horizon.

Upcoming Economic Events and Earnings

This week is packed with significant events:

End of the Month: A common period for market activity.
Fed Meeting: The most anticipated event of the week, though one speaker suggests big tech earnings might be more impactful.
Big Tech Earnings: Apple, Microsoft, and Google are scheduled to report, and their performance has been a "straight line up."
PCE Data: Expected to be reflected in the futures curve.
Other Earnings: Numerous other companies are also reporting.

Futures Curve and Volatility

The futures curve for the S&P 500 shows a relatively small volatility bump for the Fed meeting itself, with a larger bump anticipated for the end of the month, likely due to PCE expectations. E-mini futures are showing only 14% implied volatility for the rest of the week, indicating low expected movement.

Market Open and Asset Performance

As the market opens, significant upside moves are observed:

E-Minis: Up 54 points, then 68.80.
Nasdaq: Up 240 points (just under 1%).
Dow: Up 330 points.
Russell: Up 25.27.
Oil: Catching a bid, trading at 61.89.
Volatility Futures: Coming in, down 75 cents (a 4% move), suggesting a VIX around 15 or lower.
Bonds: Down 16 ticks.
Gold: Off highs, down $43, trading just under 4,100 an ounce.
Silver: Down 30 cents.
Bitcoin: Futures up 3,200, spot up 2,200, reinforcing the risk-on sentiment.

The opening is described as a "face ripper."

Gold and Silver Dynamics

Expected Move in Gold

The expected move in gold for the week is a remarkable $126, which is about three times what would have been guessed six months ago. This indicates a significant increase in volatility for gold.

Gold Volatility and New Trade

Despite the large expected move, gold's implied volatility has actually come in, with an IV rank of 56. It was higher (30-35 handle) mid-last week. The speakers emphasize that gold is now a "totally new trade." The previous conviction for shorting gold is gone, and it appears to be consolidating. While a personal preference for gold to go up exists, shorting it here is not seen as a high-conviction play.

Gold as a Risk Asset?

A question is raised about whether gold is becoming more like Bitcoin in terms of volatility, potentially transitioning from a safe-haven asset to a tradable risk-on asset with implied volatilities of 16-40%.

Historical Perspective on Gold

A historical perspective from 2010-2011 is shared, where gold and silver experienced similar surges. At that time, there was a belief that gold was fundamentally different. However, after that period, gold returned to its previous behavior. The current surge is seen as potentially significant, but it's unclear if it represents a permanent change. A scenario of central banks hoarding gold to a "bubbling point," similar to silver in the 70s, is considered a possibility, which could lead to a supply/demand imbalance and a subsequent crash. Gold is reiterated as being part commodity, part currency.

Silver's Industrial Role

Silver's role in semiconductors and other industries is also mentioned, adding an industrial component to its price.

US Dollar and Risk Assets

The weakness of the US dollar over the last six months is noted, with the British pound and Euro strengthening against it. This dollar weakness is seen as a contributing factor to the rise in risk assets like Ethereum and Bitcoin. However, the primary driver for Bitcoin's recent surge is attributed to general risk-on sentiment.

Bitcoin and Market Correlation

The correlation between Bitcoin and the broader market has increased significantly over the last four months. A major drop in equity markets is expected to lead to a similar drop in Bitcoin, and vice versa.

Earnings Analysis and Strategy

Big Tech Earnings

Apple, Microsoft, and Google are highlighted as the major earnings reports this week. Nvidia's earnings are later in November.

Past Earnings Performance

Netflix and Tesla are cited as recent examples of companies that disappointed on earnings, leading to negative price action. This raises questions about the performance of other companies within their respective sectors.

Sector Analysis Approach

A strategy of looking at earnings within a sector is discussed. If major players like Ford and GM don't perform well, it's expected that other auto names might follow suit, and similarly for banks.

Options Strategy for Earnings

A contrarian options strategy of playing cheap calendar call spreads on big earnings names (particularly the "Mag Seven") is mentioned. This strategy is likened to playing roulette, where some bets win and others lose, but the consistent application can be profitable.

IBM and Quantum Computing

IBM's chart is highlighted as an anomaly, showing a significant post-earnings rally after an initial dip. This is attributed to a renewed focus on their quantum computing initiatives, particularly their "Watson" AI platform. The speaker expresses skepticism about Watson's past performance in fantasy football applications, questioning the strength of IBM's AI if that's their best offering.

Tesla's Post-Earnings Volatility

Tesla's post-earnings movement is described as incredible, with a pre-market drop followed by a significant intraday rally. This highlights the extreme volatility that can occur around earnings announcements.

The "Buy the Dip" Mentality

The market sentiment seems to be characterized by a "rush" to buy, with the idea that "you got to get it today because tomorrow it's going to be more expensive." This can persist for a long time but is not guaranteed.

Sports and Other Market Commentary

Chicago Bears and Kids' Football

A brief, humorous interlude discusses the disappointing performance of the Chicago Bears, contrasted with the success of a children's football team that won their game and is heading to playoffs.

World Series

The World Series is mentioned as being tied up, with one speaker expressing no particular interest or bets on the outcome.

Federal Reserve and Interest Rate Expectations

Fed Meeting and Rate Cuts

The market is heavily anticipating rate cuts in the coming year, with Fed Funds futures pricing in significant cuts. However, the Fed's official stance, as communicated in their September Summary of Economic Projections (SEP), suggests only two more cuts this year and a more cautious approach for next year.

The "Reckoning"

A potential "reckoning" is anticipated where either the market's expectations for rate cuts are too aggressive, or the Fed's outlook is too conservative.

Curve Twisting

The possibility of the yield curve twisting is discussed, with the 10-year yield coming in while the 2-year yield rises, as seen recently. This is seen as a positive for long-end bond positions.

Fed's Communication Strategy

The current government shutdown is seen as providing the Fed with cover to maintain its cautious stance, allowing them to say they lack sufficient data to alter their current projections. The focus is on whether Jerome Powell will introduce any surprises regarding next year's outlook.

China Trade Relations

The potential for a significant trade deal between the US and China is discussed, with reports suggesting that 100% tariffs on November 1st are effectively off the table. This is seen as positive news, but the question remains how much more good news the market can absorb at record highs.

Shorting the Market and AI Supernova

Difficulty in Shorting

Despite the high valuations, shorting the market is described as extremely difficult due to the prevailing risk-on sentiment and the tendency for dips to be bought. The market is characterized by a lack of sustained downward moves.

AI as a Driving Force

The "AI supernova" is identified as a major factor driving market performance, with significant investment flowing into AI-related companies. While this is seen as a long-term trend, traders are looking for speculative fervor to boil over and create correction opportunities.

Buying Downside Exposure

Buying downside exposure is considered cheap by definition, but a clear price signal is needed to initiate short positions. Friday's market action, which saw a higher high, was not that signal.

Strategy for Shorting

The strategy for shorting involves waiting for a price signal, such as a significant move that indicates an extension, and then using options like selling calls on gold after a surge to benefit from volatility decay. For the S&P 500, using SPY or QQQ options with longer duration is suggested to avoid excessive risk.

Market Risks and Opportunities

Lack of Bad News

The primary "bad news" identified is the high stock prices themselves.

Post-October 10th Observation

Following the October 10th market dip, a week of ostensibly good news (solid earnings, rate cut speculation) failed to lift the market, creating a sense that something might be fundamentally wrong. However, this sentiment did not persist.

Volatility Compression

The fact that volatility is coming in despite upward market moves is seen as an indication that the market is being managed, suggesting "smooth sailing" in the short term.

Event Risk and "Buy the Rumor, Sell the Fact"

The upcoming events (earnings, Fed talk, China relations) present event risk. Once these events pass, the market might shift to a "buy the rumor, sell the fact" dynamic, as there may be little new information to drive prices higher.

Buyer of Last Resort Mentality

Even if big-name stocks like Apple or Microsoft miss earnings, there's an expectation that buyers will step in, making a bearish argument difficult.

Expected Move and Consensus

The expected move for the rest of the week is 75 points. All three speakers agree that the market will likely move outside of this range, indicating a consensus for a larger move.

Conclusion

The market is characterized by strong risk-on sentiment, all-time highs, and significant upcoming events. While the AI supernova continues to drive equity performance, the difficulty in shorting and the potential for event risk create a complex trading environment. The Federal Reserve's communication and the market's expectations for rate cuts remain a key focus. The consensus among the speakers is that the market will likely exceed the predicted 75-point move for the week.