The US is spending more on interest than it collects in revenue but sure let's talk about Netflix earnings · Daily Briefing

In 30 seconds: Luke Gromen and others debate the deteriorating US fiscal position, with East Asian creditors shifting away from Treasuries into gold and equities, rising interest costs exceeding receipts, and the implications of Fed rate policy on debt sustainability. Semiconductors fell for eight straight sessions and the Nasdaq 100 closed down all five days last week, with record SPX put volume and elevated skew reflecting heavy demand for downside protection concentrated in AI and chip stocks. Brent crude surged above $110 per barrel and WTI backwardation widened sharply, driven by tight prompt supply and rising Iraqi export volumes recovering toward pre-war levels. NAHB homebuilder sentiment dropped to its lowest since 2012 as mortgage rates and affordability challenges weigh on buyers, while US inflation remains elevated compared to a cooling Canada where housing is also slowing.

The arithmetic here is not subtle. US interest plus interest-like obligations now exceed 100% of federal receipts, and those obligations are growing at 2.5x the rate of receipts. The creditor side is where it gets structurally interesting. Over the last 12 months, China's surplus inclusive of gold purchases has run roughly flat. These, the argument goes, are the actions of people who understand that the only way out for the US is to devalue. Caymans-based US hedge funds — which account for roughly 35% of foreign buying of notes and coupons — tend to sell bonds when equity volatility rises too far, making them unreliable marginal buyers. Meanwhile the US is effectively financing US deficits driven by trade, dumb foreign policy, and the interest on the debt from past dumb foreign policy, while China recycles dollars into ownership stakes of US companies, leaving Americans to buy negative real rate USTs. The fiscal transfer channel compounds matters: lower-income transfers exhibit a marginal propensity to consume above 100%, while upper-income transfers run around 60% — less inflationary dollar for dollar, but extreme in aggregate size. Gold settled at $4,159.60, slipping 0.51% on the day.

If you are looking for a market that knows exactly what it is afraid of, this is a good place to start. The fear is legible in the options market. On Friday, 4.37 million S&P 500 put contracts changed hands, a record going back to 2005. Buy-side short puts added across 19 semis names and ETFs: 758,000. You do not accumulate that kind of protection because you feel good about earnings season. The broader technical picture is unusual. Tech 10-day A/D line is oversold, while S&P 500 10-day A/D line is overbought. That divergence is rare. Printed circuit board inflation: 49%. Netflix reports quarterly results tomorrow after the close; the stock has opened lower by at least 2% following its last five reports, with 10%+ gaps down following its last two.

Brent crude has reached $110 per barrel, its highest level since May, and the term structure signals that prompt barrels are hard to find. WTI prompt backwardation now sits at more than $4 per barrel, having widened by 1 dollar today alone. Through Friday's session the move was even larger, up $1.50 per barrel. In the last five months, WTI has only closed above its current level once, on September 15. The squeeze mechanics are straightforward. WTI crude is being squeezed into tomorrow's November contract expiry. Brent's own forward curve tells the same story: DFLs backwardation ballooned to nearly $6 per barrel this morning after dipping toward $3 per barrel just last week. A near-doubling in the prompt spread is the market's way of saying physical supply is tighter than the flat price alone would suggest. Iraqi volumes climbing back toward normal should, in theory, ease some of the tightness. In practice, the curve is not buying it yet. When backwardation widens this sharply, the market is telling you that barrels arriving next month do not solve the problem of barrels needed today. The flat price follows the spread, not the other way around.

NAHB home builder sentiment: 29. That marks the lowest reading since June 2012. Mortgage rates and affordability challenges continue to sideline homebuyers. The broader inflation picture is not helping. US inflation remains too high, and the headline numbers bear that out. The sticky-price inflation measure sits at 2.8%, which sounds manageable until you notice that headline inflation is running at 3.7%. The good news, such as it is: underlying inflation looks less alarming once you strip out the noisier components. The bad news is that 'less alarming' is not the same as 'solved.' Inflation is running cooler in Canada than the US, and core inflation there is at target. Meanwhile, US housing appears to have stabilized, at least by some measures. Homebuilders, however, are still deeply pessimistic.