Big stakes for USDJPY over US jobs report.

Welcome 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. Hey everyone, it's Friday, 4th of September, 2026, and we have a market in a more positive mood trying to enjoy a little confusing dovishness from the Fed's Waller. I'll get to that in a minute, and some relief on the rise in bond yields front as we saw a decent rally in bonds in part on that dovish turn from the Fed's Waller. But in any case, a bit of tick versus the tock recently of the big sell-off that really has not gotten to that big of a magnitude just yet. Things did look nervous and still do look nervous. In my view, but for now, decent bounce. Quite curiously, with the hardware space, the semiconductor space, pretty much absent in this rally. Some of that I think down to Broadcom reaction. You have Broadcom down 2.75% yesterday after their earnings the prior day, down below the 200-day moving average. Maybe a little bit of a cool in that space. I'm not sure. It's not consistent across the board. We did have the enthusiastic reaction to the Dell report. Massive sell. Sales of AI servers, et cetera. It had Snowflake up 16.5%, although I think it was far more than that, if I recall, in the aftermarket post its earnings the prior day. Another negative one was Sienna, apparently still shooting the lights out in terms of its actual growth, but it just hopes are even higher. This is a typical problem here. And it was off 10%, and it's quite interesting, that one. So you have a Dell that's essentially trading at, I don't know if it's all-time highs, but it's certainly the local highs. And Sienna down at the lowest level since March after its earnings, and this disappointment relative to those hopes. But I think it's just a valuation issue. We have a forward PE for that company of 45 for one that's looking to, its growth could be decelerating to sort of the sub-30% range in the coming couple of quarters, according to at least the Bloomberg projections I saw. So yeah, we did see a rally yesterday, but it wasn't across. So yeah, it's not a, we did see a rally yesterday, but it wasn't across. relative to expectations 48 plus. So that was a small off note, but the market is super focused on employment data. And then next Friday's CPI. So let's have a look at a couple of other things. We had just in the small currencies, we have Euro stocky, quite an interesting technical move yesterday. And I think it fits with what is happening in treasury markets or bond markets globally with yields coming back in. There was this break in Euro versus the Swedish krona above 11 spot 11, clearly sort of defined range. It's sort of squeezed up to 1118, 1119 area. And then this bond yields coming back down, a bit of risk sentiment coming back into the market. It's reversed. So the quality of the reversal, we need to follow through here, but an interesting technical development there. And then so the US dollar, yes, it was a bit weaker yesterday. Some of that on the weight of the U.S. dollar. And then the U.S. dollar, yes, it was a bit weaker the dollar-yen move, but it was independently weaker elsewhere as well. Euro dollar squeezing up through 116, 2530 area, et cetera. And as I think I just briefly mentioned at the top there, this Waller rhetoric is just super confusing for the market on the back of Worsh's very hawkish comments on inflation concerns. When Waller says things like recent data suggests that we're finally seeing some disinflation and that the underlying inflation is actually better, in other words, than the current number suggests. So are these guys even communicating with one another is a very, I think, pertinent question. And it just confuses the market and suggests that they're all swimming in the same direction, that on net, this looks dovish. Now, incoming data is going to do what it's going to do. But the interesting thing here being that this dovish twist here from Waller, some of the market reactions, a little bit less than the market reaction, but a little bit less so in FX directly and more so in other asset classes, suggesting that there are some market participants that are really champing at the bit for these types of signals. So you had gold, again, sprinting back higher, tested briefly above 4,500. I think gold is maybe waiting for the FOMC meeting. I'm not sure, but it's certainly waiting for inflation data. But technically, it's waiting for this 4,500 plus area, maybe a little bit more needed, a close above there, reversal. The hurdle has been high there, but it's really been scaling back higher after that pretty deep sell-off, which in part was, again, triggered by the Fed itself, by Warsh's hawkish posturings at Jackson Hole. And then we had crypto lit on fire by all of this yesterday. We had Bitcoin at 82 spot 2,000, just shy of the big May high on the chart. If you go back, that's a key area, 82.8 thousand. So, it just feels like the market is really, again, charging at things here for policy that's going to be maybe remaining a bit dovish, or whatever the signal is, we'll accept the technical signal for what it is, regardless of what the bonds and other markets are saying. So, I just found those moves quite interesting, just the enthusiasm off of what was really, maybe shouldn't have been as big a signal on the surface. It's just one FOMC member with some dovish musings. All right, let's wind all the way back to a couple of single stock stories that I want to bring in here. And actually, there was one thing I did want to mention, just because it's a small update. You might want to put your thinking cap on. I was editing an article we've kind of put together as a team effort on the upcoming midterms and where we are. And I had a glance over at the odds going into the U.S. midterms. And it's quite common knowledge, common expectations, or what do you think is going to happen in the House? 80% odds of that happening. Now, the margin of victory does matter there. There was, I'm forgetting when it was, there was a recent short period where the Democrats either had a slim majority or were just barely below. But they lost two or three members who simply died in office and not long after the elections. So, these margins do matter. And there is a slightly larger hurdle than there was the previous time around because of all these situations, which both sides engaged in, let's be honest. But the Republicans, I think, got away with more, quote unquote, in a couple of key states to finagle a few more districts to be more likely to lean Republican. There was a news item I saw overnight that I think the Missouri, the Supreme Court there rejecting the redrawing of districts there, which could cost the Republicans one seat out of the 435 that are all being up for election in the House at the midterms. But it was more interesting. I found these odds of victory. And I think that's a good thing. I think that's one of the odds more interesting than the House was the Senate odds, at least on Kalshi. I don't know how much to put into these prediction markets in terms of their accuracy. I just found the assemblage of the different odds rather interesting that Democrats were seeing, if you put together the three scenarios of the Democrats taking 51, 52, or more than 52 seats, all of those put together are right around 50%. So, it seems to be that we're around 50-50 for the Democrats to take the Senate. Which could be quite important. You need to have an embittered Trump. You'll likely have a Trump no matter what that's going to claim that the results were rigged or that illegal people were voting and voting is corrupt and all this sort of information. Everyone doubting or trying to throw doubt on the entire process, which makes things difficult. And of course, in the worst instance that some have drummed up, you get some sort of constitutional crisis or some key district refusing to certify the election. Results, et cetera. So, I just wanted to insert a short, remember the midterms segment there. But then let's go to a couple of single stock things going on. So, I did mention, of course, the crypto move, massive rallies and Robinhood, the biggest gainer and the, I guess the S&P 500, 16.6% up on the day, Coinbase up 10%. But you have this morning, the news breaking in Europe made an agreement, basically. There was rumors of 100,000 jobs being scotched, but 50,000 in the job cuts and a closure of up to four plants. Volkswagen was up around 10% at one point. It was coming off before I came in here to record the podcast. And then I wanted to mention just a little brief thing, and I've got a link for you as well. Oh, let's first, let me go to next week's key earnings. Oracle and Adobe are reporting that they're going to be able to do a lot of things. They're going to next Thursday. Two pretty big names, each with their own little theme, the Adobe, the software as a service side of things that after this tremendous recovery in those stocks. And Oracle, of course, one of the most aggressive in terms of leveraging its balance sheet to hyper scaling its data centers. But winding back to Tesla, up over 5% yesterday. There's still a lot of cyber cab rides. They're also submitting, and this is where I have a story, submitting, it's from Tech Crunch. Basically, people want to buy and run cyber cab fleets. So the idea is for Tesla to, you know, of course, it's going to, as I was talking with ChatGPT about on its scan of how this business would be structured, Tesla is going to build the car. Of course, it's going to license this full self-drive software. And it will want to control the whole dispatch, the whole app and the whole, all the payment stuff to get that throughput and earn recurring revenues, which are so valuable off of that versus just the sort of the profit level on, you know, shuffling a physical car from point A to point B and getting a one-time, getting a one-time sale and some profit from that. Actually owning the cars and all of that whole service bit, cleaning, and I think this is where the ick factor becomes an issue and a hurdle for this industry to really take off like the, you know, those with the highest expectations would have for it. So owning a car, the capital intensity there, cleaning it, that's a lot of human efforts, although Musk, of course, has touted the idea of self-cleaning cars, not sure how that would work. And then the charging and all the servicing with, you know, the damaged inside out, do the tires have the right pressure? All this stuff would be owned by somebody else, all that cost and complexity and all the infrastructure as well. Where do you park the darn things? Where do you charge them? All this stuff. So it's basically, I guess, polling for people to provide infrastructure and those that would like to own cyber cab fleets. So the question will be, you know, is this the inflection point where this stuff starts to take off? I don't know, but of course, increasingly Tesla is being prized as if it is. By the way, SpaceX was up over 6%. I was trolling through a little bit of news headlines, not seeing a convincing attribution to what that was all about. Yeah, I think that was, oh, and then by the way, I somewhat am more enthusiastic about, if you look at what the implications are for an autonomous driving fleet of vehicles, I'm somewhat more enthusiastic about larger vehicles that could have lots more riders because people that already own cars, are you really going to ditch your car to just operate or run a, um, um, And I mentioned that ick factor to just sit in another car that you don't own. But this robo-van idea, the idea of having a multiple-seat vehicle that has some kind of complex routing software, it sounds to me somewhat more plausible for a vision of mass transport, especially from these big mass events. Like consider a sporting event where there's 50-plus thousand fans assembled, and they need to get away from that event to another place. I can imagine there could be a lot more productivity and efficiency in that type of a scenario with autonomous driving vehicles. All right, enough of that. I'm not a technologist, but I do find these things super interesting. And by the way, I'm getting further into this book that I put in yesterday's podcast, Episode 16. I'll leave the link in the description, the link, this nerd reich. It is actually – the first part just sounded like a sort of recycled standard criticism of – or boilerplate criticism of the tech bros, the broligarchy, all this stuff. But as it gets into the weeds of the origins of the sort of the philosophy that a lot of the Peter Thiel's and folks of his ilk believe in, it's actually very well written and very interesting. So I just want to go back and circulate. I just want to go back and recommend that it is a good listen as an audio book. I think I'd probably like to have a paper copy instead because there's some side links and things like that that are easier to pick up on when you have the words in front of you on a page. All right, we have a super interesting setup here going into Labor Day weekend. I talked earlier this week about this run-up in treasuries as being the key driver of the risk of a bigger volatility event. That remains the case if we do get a super hot jobs report in the U.S. And we see a fresh start. We see a spike in yields. That offers one type of scenario and maybe challenges risk sentiment if we see bonds melting down again, yields spiking back higher. But maybe risk sentiment gets a break if we get super dovish figures. And, of course, is a weak U.S. labor market something we should celebrate? And risk sentiment, I'm not so sure. So it's maybe more neutral to risk sentiment than decidedly positive. But it could be positive if the primary obsession is the growth. It could be a concern about yields. Parking that, it's the Dolly Inn situation that I find especially interesting in a scenario where we have much softer than anticipated U.S. employment data today, as emphasized earlier on the call. And, by the way, I should have talked about it earlier. And I don't want to go back and shuffle around the audio here because I need to get this out since we're running up into this jobs report in just, what, a little under four hours as I'm talking here. But the unemployment rate is a particularly interesting one this year. I'm sure I've talked about it before. We have this 4.1% unemployment rate. It looks like it's dropped from 4.5% since November of last year. But that drop has coincided with a pretty chunky drop of 0.5%, in fact, in the participation rate. This is partly demographic, old folks not participating as much anymore, perhaps choosing to go into retirement, the labor force, you know, therefore somewhat shrinking in actual real terms. Or in actual nominal number terms, I should say. And, you know, that explains a lot of that drop in the unemployment rate. So we need to be careful looking at whatever the unemployment rate is today for interpretation. So if it drops to 4.0%, but we also have another big drop in the participation rate, that's not really that positive a data point. On the other hand, if it goes up to 4.2% without a drop in the participation rate, that's somewhat negative news. So just be careful. You need to look at both. The nonfarm payrolls, which is the worst, you know, quality announcement probably and the one we like to react to the most nonetheless. But then there's also this unemployment rate and the participation rate combo to work into the overall impression. Two totally separate surveys. It's the household surveys, the establishment surveys. So keep them a little bit separated. And they need to both be swimming in the same direction for multiple months before you have a strong idea of what the U.S. labor market is doing in the first place. Okay. That's a wrap for today. Stay careful out there. Have a wonderful weekend when you get there. And we'll be back next week with the 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 marketcallatsaxobank.com. That's marketcallatsaxobank.com. Saxo. Serious trading worldwide. We'll see you next time.