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 host and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Hey everyone, it is Tuesday, 27th of October, 2026. Market's in a pretty decent mood yesterday as we're seeing this Anthropic Prospectus released ahead of, of course, an IPO. It looks like they're on schedule according to previous rumors and what the general noise is for some kind of timing around November 16th or at least that week of, according to the research I've been doing, at least Reuters and other sources, estimating thereabouts for the timing. The estimates have gone up. The estimates have gone down a bit on how much they can raise. The $2 trillion valuation was thrown about a bit. Now it seems more like the $1.5 to $1.75 trillion range, hoping to raise $100 billion on this IPO. Looking at some of the discussion of the prospectus and of what's going on here, it does look like there's talk that the secondary share offering looks unusually large. So, in other words, some hoping to get some level of cash out from day one. With these current market valuations, seven founders of Anthropic worth over $13 billion each. And I just, this is a really important IPO. It speaks to the confidence of the entire AI complex. Of course, these frontier LLMs, OpenAI and Anthropic are the center of a lot of the spending and the circular financing arrangements and so on. And, you know, the argument is, yes, on an operating basis, they look like they're making X profit. But what is that profit? If you're looking forward to the amount they have to put out there for the compute bill. And what is the willingness to pay up for frontier models, which constantly seem to have to run faster and faster to keep ahead of the sort of the low cost models that are coming up from behind? It appears that LLMs are, you know, it's a commodity market once you give it a couple of months for the others to catch up. So here we are. I think just a massive test of the whole net, you know, the whole space really in the coming couple of weeks. So the conspiracy. Theorists are out there saying, look, why didn't they include more Q3 data in this release? They should have that Q3 data. Why is it not there? Is it because they don't want to show that spending levels have collapsed? There's been a lot of coverage of a company is reeling back in their spending on tokens because these bills really mounted after this initial sort of rush to the, hey, spend, you know, just do all the AI you can because this is something we need to discover what we can do to optimize our business. And then they're not seeing that optimization. See some of the links yesterday, for example. In the podcast episode description on that coverage of that, you know, whether these were any companies are really seeing much in the way of productivity enhancements outside of the key large tech companies, at least. So, yeah, I don't know what to make of it. I think I'm skeptical. Let me put it that way, especially at these levels of valuation that are being discussed in this this big event. A little bit related to that and some more good links. I think they're good in today's podcast. Episode description. I'll put in one to Michael McNair, who's making a very rare general bearish market call on the incredible level of risks out there relative to where the market is in this particular. I haven't read through the whole thing, but he's often argues a good case. And I think he's particularly concerned about the risks of these cyber attacks, which are happening on a mounting basis. And we know with these cheap AI based tools, there was the recent PHP shell hack that was discovered. Something has been or a flaw, at least in the software that's been there for years and then just discovered by, I guess, some kind of AI brute force assessment of the software. That's just one example. He's concerned there. And as well, you know, he puts in a little color here on something like anthropic IPO, you know, whether the costs on the compute side are fairly assessed or whether they get sort of absorbed into shareholder dilution. He specifically calls out so-called free cloud credits were. Amazon might provide some cloud capacity for anthropics output, but then Amazon is rewarded with anthropic shares as we head towards an IPO. So there's let's just say this is a massive test for for the whole AI space. For now, the market received this as a positive news item. We saw especially the whole market was up. We had a rare day where just everything was not everything, but the broad market was up. The median stock was up. And especially the tech companies were up. We saw the stocks index up two point eight two percent and a timely rally there because it was down touching its 200 day moving average of the prior day. We saw the Nasdaq 100 up over a percent to S&P down or sorry, up only seven tenths of a percent. The median stock, the S&P 500 equal weight up about a third of a percent. Russell also up a little over a third of a percent and crossing or not crossing, but tested its 200 day moving average. From below and kind of shied away from that. So it's interesting to see that divergence still with the Russell 2000 below its 200 day moving average. The stocks testing its 200 day moving average from above. And then the headline market cap weighted indices still way, way up there. Not that far from their all time highs, but really stuck in a no momentum environment for the broader index. There wasn't much in the way of relief from crude oil prices, but I guess they're a little bit lower yesterday and they've kind of come back here. Again, we have this massive overhang. It does feel like we're just awaiting for the next round of military action and the concerns that Iran has maintained sort of the ability to mobilize various asymmetric forces and possibly an increasingly disruptive attacks. If it just feels like it has nothing to lose in another round of assaults from the U.S. and Israel and starts to go after things like key energy infrastructure once again, that's the worst scenario, of course. But in any case, Brent. It's December, Brent, back at 116 plus this morning, WTI 102. We have the Israel election today. We'll cover that tomorrow. Again, even with Netanyahu's chances fading, the coalition math for the opposition looks very difficult without working with the so-called Arab parties. And some of those have vowed they wouldn't or some of the opposition bloc has vowed that they will not work with those parties. And then you can't put together a coalition, which means that Netanyahu could stay on for some time. Yet, unless some agreement can be struck to form to form a new government, that is. Saw some news or noise this morning about a U.S. embassy release encouraging further personnel in Riyadh to to leave the country. This is a concern, obviously, that something big is gearing up. This is always a move that the U.S. does take before launching some kind of attack. And we had a positive session overnight in Asia. The Kospi liking the A.I. noise. Up three percent. Nikkei up one point seven three percent. Europe was up decently yesterday. And just in the case of the euro stocks, 50 just managed to cross back above the 200 day moving average. So once again, these big 200 day moving averages have been in play. Risk sentiment not being enjoyed over in Bitcoin land. We're struggling below the eighty thousand dollar level. And there's some support coming up there. I don't have it noted down, but look out for support coming in not far below where we are for a potential run to those. And next, support levels lower. One of the interesting news items was Microsoft was offering a buyout to sixty thousand employees. I think they have something like two hundred thirty thousand employees total. So that's a decent chunk of their existing workforce. It was in specific countries. It does expect only or less than 30 percent to accept these offers. I think 30 percent was the number that accepted a prior round of buyout offers for or retirement packages, whatever they were called for a far smaller. The noise around this is that they're kind of looking to save money on options related compensation and bonuses, likely as they are a little bit more pressured on margins with these dramatic capex outlays that they're needing to commit to in order to to encourage or to continue the AI build out. We have earnings rolling in. The only thing I saw was Verizon. I think they were down about three percent yesterday. Today, we've got UPS, Robin Hood, Freeport, Mac Moran, Visa. That's maybe an interesting one, a broader read on strength of the consumer, Boeing and Seagate. So a key tech company there, as well as Corning, the glass sort of fiber optics and glass screen maker, which has had at times some pretty impressive advances this year as the, you know, as the tilt got towards the optics and fiber optics side of data centers, et cetera. Tomorrow, the big. Mag seven companies start coming in, Microsoft and Alphabet. And then Thursday, we have Amazon dot com. All right. Over in the macro space, we have the dollar firming a bit here, that dollar yen getting back uncomfortably close to one fifty eight again, just about ready to fully reverse out that prior move. Such a disappointment to those looking for the yen to build some momentum here. Really critical, of course, three days ahead with the FOMC tomorrow and the Bank of Japan on Friday yields sort of. A little bit yesterday there was a two year Treasury auction with slightly tepid demand relative to the prior string of auctions. but they rolled over a bit again overnight, but not really much changed at the end of the day, or I should say beginning today relative to where we were trading yesterday, right on that 5% level on the 10-year awaiting the message from the FOMC, who I do not think will hike, nor does the market, as we're all looking for forward guidance that we're not going to get for the December FOMC meeting. ECB, I think, is priced way too richly for further hikes. We've had this disorder in French debt markets, although that did fade quite decently yesterday. We saw the Germany-France spread down in the low 150s. We're back up a little bit today, but that was a key break lower. And if you look at something like the French 10-year OAT, it rallied very strongly, the yield falling at 12 basis points and well back below the 5% level. So some relief for now. How much more is really important for France? I still think it's a long-term issue. And I do have a good link to a brief part of a Macro Voices podcast, which was mostly with Anas El-Hajji. I didn't really listen to that part, but I did listen to Louis Gave, who is always interesting to listen to, but is also French. So he has a bit more insight. Very interesting, 15 minutes or so, speaking about the situation in France, how we are not moving towards a solution because the rest of Europe is not going to bail out France. And France has such a dysfunction. And France has such a dysfunctional domestic political environment that it can't do the austerity that is necessary. And what would be – the solution is either austerity or default, really. And that's neither – or a devaluation. And none of those solutions is really being talked about. And in the meantime, he contrasts the situation now with where Germany was as the key economic power in Europe back in the previous crisis when it could afford to allow the ECB and, of course, the lack of inflation at that time could allow the ECB to do its dramatic monetary policy moves to shore up the whole sovereign debt situation. Those options are not available. Austerity seems to be impossible. And devaluation is not on the table. Redenominating this into a French franc, this is not on the table, nor is there serious talk about default. Although he does say, and this is really key relative to the situation in Italy, that France owes most of its massive debts to France. Foreigners. So if you're going to default, you want to default on a foreign capital. And, for example, in Italy, most of those savings are held, or most of those Italian bonds are held by Italians. So that would be very economically damaging on the domestic front in the event of a default. So some good discussion. Super interesting as well about this. There used to be – in most societies, you have sort of an A team and a B team. So you have the opposition and those in power. And he says in France, the really difficult bit is you've got three Frances all vying for control here with their own agenda. And it makes it a very difficult domestic political environment. Great conversation. In the meantime, we've got Eurodoll under pressure, finally getting away from that 1.12 area, which was really like a magnet over the last six or so trading days. 1.11.60 and even below was trading this morning. We've got Euronauki down to the lowest level since late 2022, part of that being Euronauki. part of that being Euronauki. We're being fed by these very high natural gas prices in Europe and Eurostocki coming down as well. I think there's room for that one to fall another percent or so to at least the 11 area. And if things improve risk sentiment-wise across Europe and especially the French debt situation stays quite stable, there could be some further room to downside assessing the further implications there. And especially if the ECB proves more dovish than the market is currently pricing it, which I think is a reasonable risk. And if the ECB proves more dovish than the market is currently pricing it, which I think is a reasonable risk. Going into Thursday's ECB meeting, let's see what they come up with there. That's the one I think that has the most potential to sort of surprise this week. In the meantime, we've got the RBNZ up tonight at 1 o'clock GMT, which is 3 o'clock here in Europe. So very early because, of course, they're on the side of the planet. Bank of Canada also up tomorrow. They are expected to hike as well. By the way, in the commodity space, we've got gold down below $4,000. We've got gold down below $4,000. There's an ounce at times this morning. I think it's not liking the oil price. Certainly not liking either the whole vibe in the space with Chinese deflation going on here. And we've seen the five-year, for example, Chinese government debt yield, this is domestically, down at 1.34%, an all-time low there, really dealing with the classic balance sheet recession in China and not doing the typical moves or the moves that have been typical elsewhere. Trying to export their way out of the problem. It's a very ugly environment there domestically in China. And you wonder when they start to stimulate. They're probably going to wait for the other side of this energy emergency, I would imagine, but critical stuff. And then we have silver down below $53 an ounce. Next level is sort of psychological, but then below that, that being the $50 level, you would look at something like $45, if I recall from a recent investigation of the chart. The UK budget is up tomorrow. Absolutely critical. And with that, I'll have a link to a piece FT Alphaville linked to, which is some thoughts on what the person argues is a minimal credibility test for this budget. You're seeing some interesting signs out of the UK, attempts to get more pragmatic on some kind of relationship with the EU again and on North Sea oil. And I think that the energy situation is really a strong sign of pragmatism from this Burnham government. Let's see if they follow through with that. I suspect they will. But how? Enthusiastically will be a critical question. By the way, again, I just want to highlight yesterday's links as well as today's in the podcast episode description. There was that one discussion from, what's it called? The Perkini Report. It was a goofy name. But Dario Perkins putting out this piece that went viral on the AI bubble crash from a 2030 perspective. So looking back at how it unfolded, saying that could unfold starting in late 2027. He has actually rather, it's, I didn't, I think, fully discuss it yesterday, but it sounds quite optimistic in terms of what the economic impact might be, even if the investor impact is quite strong. And it's a little bit like railroads. So you're building sort of this new tool and our ways to operate it, this new tool being AI, of course. And then once the overspend and overvaluation of all these, this whole boom cycle has come and gone and unfortunately wiped out investors would be his view from the 2030 perspective. You still have a lot of the infrastructure in place and our knowledge of how to use these tools for increasing productivity and keeping the economy humming. So it doesn't have to mean everything bad for the economy. We just need to be aware of the risks to investors, I think is the general message from that. So have a look at that one. The Macro Voices interview, the comments on X from Michael McNair, the UK budget piece. And then the Wall Street Journal talking about, and this is a little bit of color related to, you know, what could be the actual number one key growth constraint for AI, even if the demand is there to continue to drive a lot of spending. And that is the ability of data centers to go live and to plug into the electric grid. And Wall Street Journal links that with actual midterm elections going on in key states where some data centers are going up. So a bit of color on, you know, the hurdles that some of these data centers face and could be higher hurdles post-election, depending on the outcome of these, these elections and what the two sides are saying. The general gist, but not 100%, the gist being that Democrats tend to be more skeptical and Republicans tend to be more pro or permissive, I should say, of AI data center operators setting up shop and getting the go ahead. The political risk there being, however, that power prices going up in the area could impact their constituents and their political prospects as well. So all those links, in today's podcast episode description, I think I neglected to mention the Brazilian Real, the big revaluation that suffered because of Lula's victory in the presidential election. It really was a shock. You saw a huge markdown on the currency there after it had rallied. It really was a surprise to the market. And you're seeing an impact into Brazil-related commodities, coffee and especially sugar, as Brazil is sort of the, it's actually a misnomer to say the Saudi Arabia of sugar. It's more than that. It's a very dominant supplier of, you know, sugar. In the meantime, we've got El Nino, the latest temperature level, taking up another tenth of a degree to a new record of 3.4 degrees for that key area of the Pacific. So this huge El Nino continues to build. All right, that is a wrap for today. Super interesting. Now we've got a timeline. Hopefully we'll know the actual date of the anthropic IPO. Really key phase, really key sentiment test for the market on that IPO release window. And how it trades in the wake of that. I mean, you've also got to raise $100 billion from the rest of the market to pay for those shares when it does hit the market too. So you have to think of that side of things as well. Stay careful out there. And we'll be back tomorrow 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. feedback and questions of all kinds. To reach out, you can drop us an email at at marketcallatsaxobank.com. That's marketcallatsaxobank.com. Saxo. Serious trading worldwide. Thank you.
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