Can Fed Chair Warsh give the market what it wants?

Welcome to the Sanxo 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. Everyone, it is Friday, 28th of August, 2026 and we have a market in a fine mood after the Nvidia earnings splashed through markets or over markets yesterday together with those other earnings reports. Pretty good extensions of what we saw after hours and video was up 8 and 3/4% sales force 22.6% that helped to drag up a lot of the softwares of service names as well plus 10% for service. Now for example, Adobe almost 6% and then over in cyber security crowd strike extending its move up 20 plus percent and that company octa. I'm just staggered by the size of this move company growing at 10% a year up 28.6% in yesterday's session. However, we look at the overall averages, I mean, yes, the NASDAQ 100 up strongly, a lot of that, the of course, the market cap heavy weights helping it up 1.4% the S&P 500 up to 3/4% but the median stock was down and in fact, we had 350 almost losers on the day relative to 150 gainers. Strong signs of this really, these really big diverges is across market, negative correlations. It's a bit of, it's a bit odd really. Let's see where it heads, but just wanted to put that in there as well. I will park the equities for now. I just wanted to give that brief overview because we do have a critical event today that I think is going to either set us up for a further correction at some point very soon, I think, which running into the seasonality, all the extreme sentiment we've talked about that whole polemic pain set of sub-stack arguments in his sub-stack post put that out. I believe it was last week. You can find the link on one of the recent podcast episode descriptions. I want to get over to the commodity market. Paul Henson, you're here in the studio today, awesome to have you here, and we've got crude oil, so it just seems like we have all this maximum fear around what does it mean economic d-day, etc. But the actual flows through the straight-of-a-moose seem to be pretty solid. Even if we're at pretty dire levels, I imagine still. I haven't seen the latest. I'm sure you know the least. On the situation with these strategic supplies, and otherwise, so just briefly, take us through the oil market, first of all, what you're looking for next year. Well, John, we're definitely seeing and hearing reports that more and more oil is flowing through. It could also just indicate or confirm that both the US and Iran is looking for an off-ramp. It's still hot in the sense that there's no deal, but at the same time, oil is being allowed to flow through. Yes, they say they see around three quarters of flows now are assumed compared to pre-war levels. That's quite decent, and that basically means we still have restraints from China, and we still have supplies coming from the SPI in the US. God knows how long that can continue before these caverns collapse. Then the market is starting to get some more supply. The problem is still in the refined part because it doesn't really matter how much oil that flows into the global market when the refineries that need to refine all this diesel and gasoline. A lot of which are in the Persian Gulf around more than 10% of global capacity is stocking. Then we still have Russia as well, not exporting due to the attacks on our own facilities. So the tightness there is going to take somewhat longer to get rid of. But there's a sense in the market that we are through the worst, that there's just no appetite to escalate this once again, but yeah, who knows? Yeah, and I have, I mean, it's just so well written, the guy is so funny to read. Reminiscences of a shrub operator is the name of a sub-stack, that was about three weeks ago. Just talking about a whole network of things, I just find it so impactful what he's talking about. I'll get to the full preview of the article, but he mentions about markets under manipulation, and I think there is a strong tendency, yes, we're out of the era of QE, but we're seeing a lot of attempts by Trump and otherwise to at least manipulate markets day to day or hope to, best with this recent buyback. I've just been so staggered and we've kind of stumbled across or stumbled into this at times you and I on the podcast, Oulu, with, you know, if you presented us before the fact with a scale of the disruption of the Strait of Formus, et cetera, yes, things like China doing this incredible, you know, cessation of imports and reducing demand helped to a very large degree to avoid the worst, the worst versions of the price impact we could have seen, $200 oil and all this stuff we had talked about. But the cap, the level of which we've managed to cap oil prices, it just feels like, almost like there's some kind of manipulation going on. That's one of the points he makes in this really funny article and I will pass along in the episode description, but just roughly, do you have any sense of the degree to which you feel these markets are manipulated? Well, I think we just have to look at the fact that what's it, 30 piece deals that was announced within the last six months and we haven't had a proper one yet, but and as they were, the first one's probably had a bigger impact than the latter ones because it might just start to shrug the shoulders less, yeah, let's just wait and see. But we have seen that when we reached extreme levels in terms of also speculative lens and the price moving up, then we had some kind of announcement that basically gave a bit of a stomach punch to the lungs and they were forced to get back out again. And maybe it just prevent knowing that that cycle was there, maybe prevented those that were a bit of a price further from just saying, I don't even want to bother because I know the next announcement is going to come and hit the watch. Indeed. So we have definitely seen that as the wars moved on, the appetite to enter into speculative lung position has faded and ultimately that's what drives markets, the positioning and that has become weaker as time went by, so we'll see. Ultimately, if it's done in the futures market, the state's available for that. So it's not an actual like gargantuan position of the circulation going through a cycle. Exactly. So it's mostly down to the verbal side and you would imagine as well as what we've seen that's been quite successful at this time where we are trading below $90. We still don't have a deal and yeah, it could have been a lot worse. Sure. We'll get to grains last because there's a lot going on in grains. But I just want briefly to cover the precious metal space. We've kind of got a little back and forth going here in gold. Silver, I don't know why it got quite cheeky overnight, getting above 70 bucks. If our memory calls, I haven't refreshed my memory, look at the chart, $71 ish on the charts is a really massive level. Of course, we're waiting for Fed share, Worsh. What are the scenarios that the market is cooking up here for what to look at? I mean, if it feels break higher, I guess that would probably be on a concern, at least if it break higher if the lung is on this concern around debt dynamics fiscal and that's probably feeding a further gold value, what's your take on what the market is focused on here? We definitely reach a stage where it's fairly safe to say that the market is not only looking at interest rates because the move high and yields recently should have been negative. It was positive and as you said, John, that is the fiscal debt worries that kicks in and so on. So at this point in time, actually this week where we saw yields drift lower, a little bit gold was actually struggling a bit. So it does indicate that that is one of the major inputs right now and that is the debasement trade, the fiscal debt concerns. I think with that in mind, it doesn't really matter whether the market is pricing in another rate hike if that's going to materialize at all because I think this is greater forces that play. And a week like this where you see reputable banks and analysts saying, "Well, yeah, well, $200 silver, $10,000 gold, some time in the future, probably not can be reached. That's not our forecast." That's all. But again, when you see that being repeated on a regular basis, then it's definitely not a market where you want to try to have a bit of a flood on the downside. So that just helps support the price. And today we're back about 46, 4600. Yeah, it's going to be interesting to see whether some pent up demand waiting for just to get washers out the way and see what happens next. But. Good point of life, if it doesn't really bring anything, it's like, "Okay, we're off to the races again." So there's no threat there. Yeah. So it looks like the bit is back. The correction so far has been extremely shallow. We have not even reached the 38.2 Fibonacci retracement of the latest run-up. I think we fell short by $20, $30 of hitting that. So yeah, the strength is there for now. I would say the unimaginable scenario for maybe precious metal traders as well as bond traders would be that that's a worse comes out with all guns blazing on hawkishness. This is just a scenario. I don't think this is going to happen. Let me make that clear. And we get the short end of the yield curve up in the U.S. bit sharply because the focus being that long and rates need to be tamed. And therefore long and rates come down a little bit. The idea that, oh, they found religion on fighting fiscal proficiency. I don't believe that at all. But let's see how the market, what the market gets, and what is delivered there. All right. Lastly, in the grain's market, we have this water indicator, water temperature indicator for El Nino. It actually ticked down a tenth of a degree last week to 2.6 degrees above normal. The record is three degrees above normal, normally happening in the November, December timeframe, whenever this is going to peak, we could get way, way above that. Many people will believe we will. And most of the impacts, otherwise, are hitting next year as we've talked about. And by the way, I was looking at some climate stuff, just showing how the water the water cycle and the water temperature rises lag, what we've seen in the atmosphere. So air temperatures considerably. And that spread is very, very wide. So you've sort of got baked into the cake. One hell of a lot of global warming and climate change, whether without change in the CO2 releases, just from the water, you know, heating that is already baked into the cake, if you will. Anyway, grain prices, how much is, you know, we've talked about it before, some of it's Europe and and European wheat. And that's the Ukraine situation. What's the biggest move? And what are the fears that are materializing around some of these prices? The biggest move, meaning which grain is getting the most focused and most remarkable to move? Yeah, well, it's interesting to see that we are actually heading for the strongest months for the agricultural sector as a whole, believe in four or five years, this month. The rally has been brought, except in being livestock, well, the Trump is buying some beef in Argentina to try to have lower prices in the US. The great joy of the American cattle ranch actually. But grains and softs have been doing exceptionally well. The breadth of the rallies, I think it's worth noting, we got corn, wheat, sugar, cocoa, and cotton, all recording, double digit gains. The grain syntax is heading for strongest months since 22. And we got the soft sector heading for the strongest month in 12 years. So it is the combination of Nino, as you mentioned, John, which is impacting the soft, primarily cocoa, coffee, cocoa, and sugar, primarily. And then the grain sector where the risk to supply from the black sea is probably heading towards the worst we've ever seen. There was export restrictions from Russia put in place some years ago where we had the latest search. But this one is really quite significant. If we don't get a solution soon, simply because Russian exports this month is more than half of what they normally do. For this time of year, we're seeing the same similar numbers coming out of Ukraine. What happens if the silos get filled up and you can't empty them, then what happens? If you put the new crop in the ground like it, local prices in Ukraine is trampling because they have too much of it and they can't export it. So what does that do to farmers, economics in terms of planting next season? So all this has gone from being, yeah, well, it's not a supply issue. It's a logistic issue. Now it's potentially could become a production issue as well if you look into next year. And that's why the grain sector has, especially wheat, has responded as forcefully as it has reaching a three-year high this week. Because if there's no availability in the black sea, then North Africa, Middle East, the big buyers of grains, they have to look elsewhere and they look to Europe and they look to Australia, look to the US, and that's why these prices are getting a lift. All right. We'll continue to track that. There might be some feed-in to, of course, inflation and inflation, where they can least afford it, which is an emerging in front of your markets. Awesome. Thanks for the rundown, Ola, and I'll get back to a couple of things in the equity market. macro wise as well. And then a couple of links today, including that wonderful one, to the Liz Shrub with his piece there. Yeah. So other companies reporting, of course, there were some yesterday of notes, the biggest one being Marvel technology. They do these custom sort of chips, especially, of course, in the era of AI, these custom chips aimed at more efficient data crunching in AI-related calculations. Apparently also designing interconnects and some other bits and pieces and networking. So it's broader than just that. But they have just absolutely exploded this year that the share price for Marvel going from under 71 to as high as 3.29 at one point. We're talking February to whenever that peak was a month or so ago. And now trading after hours, 221 down 8 and a half percent after their report, there was actually not that much wrong with the report. Strong quarter decent outlook for the near term. But apparently the concern a little bit around this, this huge Google collaboration, which helps to send it on that rocket ride previously, because there are concerns that the realization of a lot of the financial benefits from this two Marvel will crew in 2029 and later, the market's a little bit impatient for that. Here we are sitting in 2026. So it's one of those things we have to gauge, you know, where you are in the ramp relative to even though it's stronger growth if you're priced to, if you've priced it too aggressively too far over the horizon, it almost doesn't matter what you deliver seems to be the message. We also had work day. They were basically flat. I didn't see what the news was there. And then panel Raquel, the French liquor maker, just down over 4% over 4% yesterday, actually decently off the lows, intercession. But these alcohol companies are just falling on hard times. It just seems to be a secular move away from alcohol. A lot of people in the US, the story is they prefer to smoke pot. But it's also about the younger generations just being less interested in drinking alcohol and some associating that with less socialization. Or less socializing, I should say, as a part of that. So there just seems to be a secular, may not even be the company's quality of execution as much as there are just some secular trends that have just shifted. And it only seems to be a permanent shift. Oh, by the way, I just noticed there is an oil store. I found quite interesting. I'm sure the impact is quite quite a bit on the longer term, but could be interesting. Some of the oil majors I didn't actually look at how they reacted to this news item yesterday. But this was likely something that was developing all along, but we need to watch for the particulars. And that is that the Trump administration is negotiations with Venezuela on establishing, I guess, basically control over certain oil fields and being allowed to, I don't know what the actual setup is. It's basically to develop these oil fields unbalested, I would guess, by my local Venezuelan corruption. I'm sure something has to be agreed that Venezuela will somehow benefit some sort of exports to duty per barrel or whatever, but something like a third of Venezuela's oil reserves, which are massive and have been totally underutilized because of the horrific corruption and the horrific inability to sustain an investment because that corruption is just going to strip everything away. So just watching for that, how that develops and what the implications could be for one or more of the U.S. oil companies. Then over to macro, we had a couple of preliminary August CPI data releases. These were not huge generators of volatility, but we do get EU-harmonized CPI in Spain at 0.6 and 4.5, 0.6, that's a month and 4.5% year and year. That was slightly lower than expected, but still a rise from 3.9%. So you're talking about inflation that over well over 4% accelerating to that in August. And then France was a little bit more benign with a month and month at 0.7 and then 2.4% year and year. That was the basic one in this EU-harmonized levels were actually slightly hotter once again though than the expectations at 2.7% on this EU-harmonized data versus 2.6% expected and 2.4% previously. But I mean 4x for the most part, just more abundant. Dalian around 159.50, it has been a tiny bit higher since the intervention, but obviously everyone eyeing this 160 level, eyeing these manipulated markets as we all know with that intervention threat, your dollar dribble back below 116.50, I think the dollars being held up by these US Treasury yields, which continued to sort of bump a little bit higher here and at the front end of the curve, we're even getting into local little highs here. We're still not there yet for the key 10-year, still 5-6 basis points below the cycle high. That 4 and 3/4% is really massive, is best not going to be able to keep a lid on things and how will today's worst speech impact that. That is the main point. I'm not going to speculate much more on this today. We'll just to cover it thoroughly in the podcast early next week. He's speaking at 1,400 GMT today and the market is key to react to this. We also are coming into month flows, etc. Both on fixed income and on equities, of course, Monday is the last day of the week, which means we have the latest possible labor day, which is the following Monday. Then it's quite interesting and funny to note that is it Ken Rogoff? I can't remember his first name, but of Rogoff and Reinhart fame. The book. this time is different. I had a copy this back whenever I bought it around the context of the global financial crisis. When this book was making the rounds, you know, oh, these top academics doing all the number crunching on sovereign debt levels and when a sovereign and never will be gets in trouble because of those levels. And then with the, of course, the monetary stimulus together with fiscal austerity, we saw nothing happen. Essentially, and in fact, we saw markets pumping higher, they were sort of thoroughly discredited fairly or not. And then there was also a really embarrassing, massive, excel spreadsheet error that compounded the difficulties there. But could it be their moment in the spotlight? Once again, in coming years, because the absolute dynamics of debt still do mean something and increasingly are meaning something now. And the old tools are not as easy to reach for when when we're at the levels of inflation we're at. And when the fiscal stimulus importantly is sustained to the degree it is as well, the policy options reduce the inflation risks rise and with those policies with that set with backdrop your policy options again are far more constrained. So anyway, that's that's an interesting one at a time when of course, Besson has been in trying to manipulate the treasury market. All right, onto the links of the day that I will put in the podcast episode description. If there's a miracle of miracles, I might even make a subtract post. I've just not had the ability to dedicate time to the longer format in the subtract. But in any case, one or the other, I'll put these links out there. The main one is this reminiscences of a shrub operator post that I alluded to earlier. Absolutely golden stuff. The title of the post is the greatest regime shift of our generation. Astrosque until the next one. The guy is so funny. There's very few people that are as funny as this guy when writing about financial markets. It's actually a few weeks old as I indicated, but he talks about everything from the golden age of drift and how how that works and nothing's really new, but it's just a level that's quite different this time around. Passification and how the mega IPOs are designed on purpose nowadays to be mega when they when they are IPO'd so that they can hitch to this whole passive investing flows. What he calls calotification, how they're outsourcing our thinking and our decision making to AI and the implications of that. Everyone turning into what he calls monkey investors. Really humorous take on the Leopold Ashenbrenner connecting that calotification thought to that and much more markets under manipulation. Mom, as he calls it and as if he's trademarking this idea, et cetera. By the way, if you don't know what reminiscences of a shrub operator is referring to, you need to run out and get the one of the all-time golden investment classics of all time and that is reminiscences of a stock operator by Edwin Lefev, a thinly disguised biography of Jesse Livermore, the legendary speculator whose lessons one can learn both positive and negative from that book and it's just extraordinarily well written as well. Yeah, and then there's a, I think it was actually in yesterday's FTL for the link roundup, but I'll just put it out there today. New York Times op ed posted by the FT writer Robin Wigglesworth, I think he's for the FT anyway. This is how the AI debt binge rocks the economy, is that piece? So if you are concerned about the debt, it's probably a decent scenario building on how that, what that could look like. And then my good, my wonderful former colleague Peter Grunneryve also had him on the show. He wrote a decent piece, a decently long piece on LinkedIn, on being careful with the notion that asset, this asset light focus is always necessarily a good idea. In fact, some asset heavy industries, those assets and that capitalize, their capital base can be even a moat relative to their competitors. And then this is my favorite headline of the day. Certainly, I didn't read the whole article, but it just speaks volume from the, from the headline. It was one of the most read on FT as well. Quote, "Junior consultants called back to office as AI increases need for human skills." The general idea being that the consul these big consultant companies are sending their junior execs out into the field more, quote, "To sharpen their human skills as AI takes over a growing proportion of their technical work." The irony speaks volumes there. All right, that is a wrap for today. Stay tuned for that Kevin Worsh speech and whether it provides us anything to go on in some volatility cross markets. I think with this good cheer, we've got suddenly injected yesterday, at least on the headline, at least in the technical momentum stocks. What can derailed a new big stock market rally? We probably have to look over at the treasury market as the chief risk there, not to call that it is going to melt down or we're going to see a melt up and yields or anything, but that would certainly be something I think the market would not welcome. And we're at these key levels. So that's where I'm certainly focusing the most for the reaction function. Yeah, stay careful out there, have a wonderful weekend when you get there and we'll be back next week with a 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 [email protected]. That's [email protected]. Saxo. Serious trading worldwide.