Speaker 1Welcome to the Saxo Market Call. Before we get started, it's important we emphasize that the views and opinions expressed in this podcast are those of the hosts and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Everyone, it's Monday, 12th of October, 2026, and markets are pretty steady here. We had a solid session on Friday in the U.S. up around half a percent or slightly more on the major indices and no real breadth issues, although I guess the SOX index, worth pointing out, a slightly softer session for chips on average. Europe late last week did survive a test of the 200-day moving average, at least for the case of the stocks, 50. It had a strong session on Friday. The Germany-France yield spread eased a bit, but it was still a good session. We had a strong session on Friday. The Germany-France yield bit backed down towards 137, 138 basis points. So that issue very much still afoot, but not pressing to new highs, the spread there for the cycle. A lot of news on the energy front and geopolitical front with Russia, Ukraine, Trump going all out to try to get some diesel supplies of some kind into the U.S. economy to address that particular weakness. There are a couple of key Senate seats. I'll talk about that, where farmers, especially in farming, states where farmers are not very happy about that diesel price. It could impact the midterm elections and the status of the Senate. But Ole, I've got you here in the studio today on commodities, and I'll let you just take it away. I mean, there's so much going on here with the U.S.-Ukraine relationship and this diesel deal, which I think you and I will agree is not going to move the needle much.
Speaker 2No, exactly, John. And when the news broke on Friday and I started taking calls from journalists, I just thought initially, what the heck? And then we start looking at the numbers, and you just realize this is as much signal value than anything. I would say attempt to try to do something to alleviate some of the price pressures, because what we're looking at is, in fact, 14 hours of U.S. total demand for diesel in November. In December, it would be one day. And if you look at the total.
Speaker 1So the initial deal announced represents about that much, just for perspective and how much supply that is. It's 14 hours. 14 hours of U.S. supply.
Speaker 2Yeah, if the U.S. were to receive the whole shebang. December, we're talking about one day, and if the total amount that's been talked about, we're looking at perhaps 10 days worth of supply. So, yes, we are a little bit low on the crack spreads, but we're still paying more than $80 above Brent for gas oil, and that's really the feedstock to all these. Yeah, it's weird when that gas oil.
Speaker 1It took me some time to figure out what that gas oil is all about. It's basically what they call the future, which is basically. It's diesel. Gas oil is diesel. So that gas oil future was off 3%, still within last week's range. So the markets aren't really absorbing this as much of a news item.
Speaker 2No, because then, at the same time, as you mentioned, we have to deal with other things that are developments over the weekend. We had the Houthis attack on Saudi, their main airport. There is a major energy conference just about to kick off. I don't know whether the timing has anything to do with that, but it highlights the risk. In recent. In the last couple of weeks, we had a major energy conference. We had a major energy conference in the last two weeks. Attacks on ships in the straits has picked up. I think the last count was around 11 ships have been taking some kind of fire. And that is just highlight that oil is coming through, but it's just coming through at a punitively high price. And so we are nowhere near anything that resembles stability. And ultimately, John, if we need to see diesel prices come down, we need to see refinery capacity being fully utilized. And that's particularly in the. Yeah. In the Gulf.
Speaker 1Right. And then I saw some. You mentioned the Hormuz Strait. So even with some degree of traffic and considerable traffic apparently going through the strait, these insurance costs are just. Not just insurance costs, but the costs per day to book a tanker. I saw some staggering figure. And it's not to put you on the spot, or if you have the figure at the top of mind, some unbelievable figure for how much it costs to get a single super tanker through the strait and to China. We're talking about. We're talking on the order of tens of millions of dollars, I think it was.
Speaker 2Well, let's just put it into perspective, John. That tanker deal that was talked about last week, basically it cost more to send a super tank of oil from the US to Asia than it cost to send the SpaceX into. The recent SpaceX launch. Okay. We are looking at, I believe, was $80 million. So that's $40 a barrel you add on top of the price. That's incredible. Obviously, it's $40. Obviously, the seller, in this case, which was a US refinery, they are not giving a discount, I would imagine, or the US oil producers. So the buyer basically has to pay that additional $40. And then suddenly, if you're looking at a refinery margin of $80, then that suddenly starts to make a bit more sense that it's not just money in the pocket to the refineries. They're paying a very, very high price to get that oil.
Speaker 1All right. And we've talked about El Nino. I did notice the latest weekly figure is out. Another record, 3.3, another 0.1 degrees. 0.1 degree in this key area, the specific, the water temperature relative to normal. There's any big volatility moves there, or what are you looking at in the ag space related to climate? Well, for
Speaker 2now, we're still focusing on this recent record speculative long in the ag space, especially grains and softs. And it has started to deflate somewhat. It deflated most certainly quite a bit on Friday when we had a WASDE, World Agricultural Supply and Demand report. We had a report out from the USDA, US Department of Agriculture, basically saying, beefing up their yield forecast for corn, and thereby also marketly making quite a substantial increase in what is expected to be left over at the end of this mismarketing year, which ends next summer. So that sent corn briefly down by the exchange limit. And we ended up, ended down quite a bit on the day. So looking at the cut data, which came out, which basically came out a week up until last Tuesday, we did see a reduction, but it's still very elevated compared to historical norms. So for now, the market's gone a little bit on the defensive, simply from an overhang of speculative lend. But the one that really stands out right now from an Indian perspective is sugar. We've seen quite a significant run up there. We've also seen a very significant build in speculative lends, which again is underpinning the rally,
Speaker 1but also something you have to be aware of. All right. I'll put a link in the podcast, episode description to your roundup of the Cot Positioning Report in the US futures market. And then we've also talked a little bit about gold and silver this morning. I mean, there's just, it's been thoroughly boring. It doesn't really want to fully go down and test that 4,000 area. It did dip below 4,100 last week, but the rallies just aren't, aren't there. And I think, I think you and I will agree, the big test for, for really for the whole complex of treasuries, for the US dollar, for gold, is this Wednesday CPI report. For the US this week.
Speaker 2Absolutely. And we've got some PPI as well the following day. So, so that, that will be the focus. But you are right. We, we've tried now on a couple of occasions to make it back above 4,200. If you look at the chart, we, the level we broke down from when we recently went down, almost testing 4,000 was 4,235. So that's really the, seems to be the, the ceiling for now. And, and there's simply not enough energy above 4,000 to, to make that, to make a rally stick at this point in time. So generally it's boxing around. We got speculators in the futures market, still net selling. They've been net selling now for the last two months. On the other hand, ETF demand continues to, to, to increase. So there's a tug of war going on right now, basically leaving it a little bit in no man's land.
Speaker 1All right. Thanks for the Commodities Roundup, Ole. And we'll see how things shape up later this week. Maybe have you on towards the end of the week to, to have another look at things. Yeah. So otherwise in geopolitics, well, we pretty much covered the geopolitics. But in politics and maybe some, a geopolitical angle here for sure, with the, given the position that was in play here, Judy Shelton. So she's a controversial figure, very clearly sort of politically leaning pro-Trump, very outspoken on, you know, the, the status or, or the, the role of the Fed being sort of against Fed independence, has talked a lot about hard money as some, to some degree linking the U.S. dollar to, to gold. And trying to, to Trump tried to appoint her to the Fed board back in 2019, but that nomination was rejected by the Senate in 2020. But she was, I guess, appointed or hired by U.S. Treasury Secretary Besant to serve as an advisor basically on currency policy with China. So interesting to see what that comes up with. If anything, is there some sort of angle on trying to force China to revalue its currency higher or what is going on there? There was a brief reaction to it. I think Treasury's tried to rally a little bit at the front end of the curve because she has previously spoken about rates should be lower, but whatever. I don't think there's an immediate read into the U.S. Treasury market from that. And then rounding out the situation in the U.S. I should mention, by the way. The U.S. bond market is closed today. It's one of these handful of days throughout the year where you have a public holiday and it's a bank holiday, but the equity exchange is open even if bond markets are closed. But it was – on Friday, we got the preliminary October Michigan sentiment. survey. Again, historical comparisons are difficult after the transition to an online survey back in 2024, but it did show and sort of confirm or sort of buttress this sense that current conditions are seen as very poor that we saw in the conference board number for September, where we saw a huge drop in the present condition index in the case of the conference board indicator. So the preliminary Michigan survey, University of Michigan survey, showed the lowest current conditions reading ever in the history of that survey. We're talking lower than the pandemic, lower than 2009. Again, there was a switch to online collections seen by many as creating bigger extremes, but it's still, in a relative sense, the same survey as we've been seeing the last couple of years. And relative to the last couple of years, the current conditions are seen as the worst ever. So that's an interesting one. And yeah, in the currency market, we have dollar kind of treading water. It was doing that a lot last week. Euro dollar sort of back and forth across 112. I think the key staking point here is dollar-yen. It's backed up, and it's backed up to that critical area, the 200-day moving average area, just above 158.50. We're trading very close to that right now. People are reluctant to sort of bid up dollars, fearing, I guess, that slap of intervention if the Japanese authorities step in above there, which is seen inevitable at some point. But how soon, how quickly, how aggressively is the question. And then we have the uncertainty of this CPI data point. As well, I guess you could argue something that's kind of tempering dollar volatility is that we've sort of peaked out a bit in bond yields at the long end of the U.S. yield curve. I haven't been sort of continuing to set new highs there. And in fact, last Thursday, we saw that big beatdown in yields. And we closed the week pretty decently off the high. So I think that's a good thing. I think that's a good thing. After a couple of strong bond auctions, or I should say treasury auctions, a 10-year on Wednesday, and then the 30-year, the 10-year was particularly strong, and then the 30-year on Thursday. So that's the macro focus this week, for sure, the CPI release on Wednesday. And then, you know, not much more to offer on single stock stories for today. We have that SpaceX story that I talked about late last week. Basically, in Friday's podcast, SpaceX securing a, I can't remember, it was an $8 billion deal or something like that for key bandwidth around 800 megahertz, using that from space, which will allow it to offer telephony, standard mobile telephony, not requiring special base stations, simply using, people would be able to use their existing handsets. This is, this bandwidth is, offers good reception and penetration through buildings. So you could be talking on your devices, theoretically, in a building through, through a satellite connectivity. This did impact, even worse than was the case pre-market, those incumbent providers out there, T-Mobile US, AT&T, and Verizon, all down to various, very large degrees. Pretty interesting when you consider how many years it would take for SpaceX to put together this, you know, infrastructure to be competing with these people. I think some of the commentary out there in the analyst space was saying this is already overdone. So we have, we had T-Mobile US down 13, more than 13%, AT&T and Verizon were down over 10% each. And then I just happened to note, when I was looking at this, so the big gainers on the day, Palantir was on the list of having a very solid day on Friday, up over 5%. And I looked at a chart, I'm noticing it has managed to reach an all-time high. Apparently, a Goldman upgrade is impacting sentiment there. It's up almost 100% from those June lows. So while the last time around, I was sort of broadly making fun of Palantir and calling it a bubble stock late last year, that was fairly well-timed at the time. That was when it was peaking out, give or take a few weeks, and it fell by almost 50% from the highs at that time. But now it is back up to, and of course, exceeding those highs. I did see one news story when I was just like drilling into any sort of news flow related to the stock that an East Midlands, so that's in the UK, an East Midlands police force is looking to pull the plug on its use of Palantir's software. There is that issue of concerns about this intelligence gathering and data security by European counterparts. Certainly at the federal level, I think, or at the national level and many governments in Europe, it could be increasingly controversial to consider using Palantir's software. We are hitting the earnings season big time this week. The big banks reporting tomorrow, the Wells Fargo angle is always interesting on Main Street lending, by the way, whereas JP Morgan, it's of course the most massive bank, and there's a lot of activity in the trading space for these big banks. So something like Goldman Sachs also reporting tomorrow, that will be the focus there. Wouldn't be surprised if it had a very strong quarter. And then on Wednesday, a tech focus with ASML reporting, the chip etching equipment maker from the Netherlands, Bank of America, Morgan BlackRock. And Thursday, we have TSMC out of Taiwan. All right. And now for some links in the podcast episode description, besides a link to Ola's cut rundown, we have just some commentary on this. Basically, since July, we've seen a real collapse in the price per token, token for, of course, AI. That's sort of the unit for AI consumption, compute consumption, whereas GPU rental prices are quite steady. Something doesn't add up. It's just something to put out there to monitor. I think there is a significant concern should these trends continue. And then this is somewhat related to that. There was a retweet or a repost of a post, and this is just a thought experiment. What could be the sort of the playbook for open AI and anthropic warning on security of AI? What are they trying to do? There's been talk about they're trying to get these regulatory barriers put up so that they become the sort of the oligopoly of providers and get some kind of pricing power that they risk not having when essentially a lot of these open weighted models are just as good or very quickly almost as good as the frontier stuff that they're making. So it's a playbook of how they could actually, you know, a bit of a conspiracy theory angle to this, trigger an incident by allowing something nefarious to happen and then running to Washington. It's just, I think it's, you know, plausible conspiracy theory, plausible playbook for how this might play out. I certainly hope it doesn't play out this way, but I think it's worth considering what could be really afoot here by these key players in the industry. This is maybe boring to many people, but it's a, I think a must read on understanding the U.S. mortgage market and the idea that maybe one sort of forced sellers of the longest dated U.S. treasuries, that forced selling may be drying up here because basically there's this sort of optionality in U.S. mortgage bonds that's a bit unique, the prepayment risk, and you have what's called negative convexity when yields are going one direction versus the other. And basically there's no reason to continue to force sell U.S. treasury bonds now that we've gone so far away from now we've gone as high as we have in U.S. long rates relative to the, you know, where people were issuing so many bonds, mortgage bonds back when rates were much lower just after the pandemic. Still worth considering. There's a real conspiracy theory guy as well that I'll pass along here. Let's call him a conspiracy theory guy. He just has some very, some might consider out there views on the whole geopolitical backdrop that we're actually already in. It's sort of a comprehensive geopolitical world war, almost a conflict. Certainly talks a good case. He's worth listening to. And maybe, maybe 20% of what he's saying is right. Maybe 70% of what he's saying is right. What's important here is to consider what could be really going on beyond what you can read and follow in the standard sources of what's going on in the world. You know, the FT's, Bloomberg's, Wall Street Journal's official versions of what's going on in the world. And I think, you know, folding that back into this whole showdown between the U.S. administration and Ukraine. I mean, you have a situation here where the moral majority, the sense of rectitude says we should support Ukraine. Absolutely. It's totally unjust of what Russia has done here. And, you know, Ukraine is the victim and we should support them. And Russia is the enemy. But if your concern is about a Chinese-based axis of powers, and that we really need to worry about the rival with China, whether it's from the European perspective or just the great U.S.-China rivalry, the U.S. ought to be doing everything it can to get Russia offside from China and more dependent, for example, on maybe Europe just for financial flows. If somehow Russia could normalize relationships, its relationship with Europe and some of the other parts of the world that pries it away from being so focused on deepening alliance with China. So I just wonder where this could go. And you're seeing this very interesting exchange between Trump and Zelensky. Trump saying, you know, stop bombing the Russian energy infrastructure. And Ukraine just saying, oh, we're basically just speaking with its actions. And then Trump even trying to get personal, saying that Ukraine needs a new leader, etc. I don't know where this is going, but it could be going a different place than where it is right now based on those, again, the bigger geopolitical picture here. But folding that back into this, David Murin is his name. He has a pay for service. He's a very smooth talker. But again, it's just to present some views that are not sort of in the common way we talk about a lot of these issues. Then we have an FT piece on the Senate midterms. And I'm super interested here. I feel more and more insecure, it seems like, with every election and understanding where the U.S. electorate is at in terms of what they're actually going to vote on election day. And part of that is the politics. The polls have proved disastrously wrong in many cases. They were somewhat more accurate for the 2022 round, but there was still a bit of a surprising, there's still a decent Republican showing relative to where the polls were at. But it's so overwhelming, this tilt, and the approval rating is just so low. I just can't help but imagine the base case is that the Democrats take the House. And I think worst case, we have a 50-50 Senate. And I think it's certainly possible they take the House. I think it's certainly possible they take the House. I think it's certainly possible they take the Senate. But it is the Senate that is the bigger question mark. And we've gone from maybe three Republican-held seats that looked possible to flip, which would result in that 50-50 balance in the Senate, 50 Republicans and then independents plus Democrats being the other 50, where the vice president, J.D. Vance, could cast any sort of tied vote to tilt the difference. You still effectively have a Republican majority at 50-50. But now we've seen this Texas race. We've seen the Democrat polling higher there, which is just really incredible. Part of it is because the Republican candidate is such a disaster. And even, as I mentioned at the top of the podcast, Kansas and Iowa, where the diesel issue is especially pressing because, of course, this is a farming country. And that's a massive input into farming or sort of agriculture in that space. I'm sure fertilizer prices are through the roof as well from this whole Iran. So, yeah, I'll put all those links in the podcast episode description. And that's it for today. Stay careful out there. And we'll be back soon with the next Saxo Market Call. This has been the Saxo Market Call podcast. Thanks for joining today's episode. We're always happy for your feedback and questions of all kinds. To reach out, you can drop us an email at marketcall.com. That's marketcall at saxobank.com. Saxo. Serious trading worldwide. you
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