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. Hi everyone, it's Wednesday, 28th of October, 2026, and we had a positive session on the headline in the markets yesterday with the NASDAQ 100 up over 1.25%, the S&P 500 up 0.6%, a lot of this in the momentum and hardware linked to AI space, the Semiconductor Index, the Philadelphia Sox Index up 3.6%. Small caps were actually up quite decent as well, 1.16%. But when we look at the S&P 500, we see that the S&P 500 is up 3.6%. But when we look at the number of gainers versus losers, slightly more losers than gainers, and the equal weight was up less than a tenth of a percent. So some of these classic internal divergences still in evidence. I guess with the AI overlay here, the strong performance of AI-related stocks, of course not universally, but in general, and in semiconductors especially, some of the big names being like Dell and Supermicro, if I recall correctly, on top performers. I guess some of this linked to the ongoing enthusiasm for Anthropic, the IPO incoming, in anticipation that the spending will continue. And on that spending front, so really important, of course, a lot of the spending, the biggest spenders are the hyperscalers. And we have no fewer than three of those reporting today and tomorrow. So Microsoft and Google, or sorry, Alphabet, of course, reporting today, those spending intentions will be very much in focus for the broader AI space. Of course, if they're seen as excessive on the spending side, that could be negative for those two companies specifically. But then, of course, if that spending is seen as exceptionally large, it could be more positive for some of the other stocks in the whole AI universe there. Of course, data center components and all the related picks and shovels, trades, et cetera. Same for Amazon, which reports on Thursday. So really curious to see how these earnings reports are greeted as well as what they contain themselves. As for companies reporting yesterday, we had Boring Visa, a spectacularly successful company. They ride a little bit of buybacks, a little bit of passive. They tend to track as having a semi-monopoly or duopoly with MasterCard on those card services and the sweet deals they get for how they're able to more or less abuse merchants, especially in the U.S. Growing at 9% nominal, and effectively that's a company that's tracking nominal growth plus a percent or two, you could argue these days. So looking forward, they're talking about a, I believe it was in the low tens or was there anticipated growth rate for the full year ahead. And the company trades with the 26 PE. That's that strong markup there relative to traditional metrics you would get for a growth rate of that size because of their, I guess, dependability uh being their size and the exposure to various indices and the passive flows and uh yeah so there you have it 750 billion dollar a company is visa these days then ck this was a slightly different vibe so negative five percent reaction apparently the market didn't like their q2 outlook uh falling short of i guess the higher end of expectations and uh you know this is one of these companies that ramped into that late Q2 high. Just an incredible parabolic price action came down so hard and is still sort of, you know, fiddling around here below the 200-day moving average. It tried to touch it yesterday, and now we've got it down 5% after hours. Also on the hardware front, more or less related to AI, especially recently, is Corning. They were up slightly after the close and after the earnings report. I didn't see actually what they reported. I just noted the price action there. Boeing down 10%, a very ugly look. Its worst price drop since 2020 when, of course, the pandemic was hitting its shares. And there were some interesting data points here. It's a bit misleading when they talk about, well, their commercial jet program has only seen one profitable quarter in the last 18 quarters. I mean, the company is structured to make most of its money on the servicing of its fleet of jets, but there are production difficulties. It can't deliver the number of 737s and 787s especially that it would like to, and that is what it is being punished for as it's still trying to get to break even on the commercial jet side. Almost half of the revenues, by the way, are in commercial jets, around 29% in the aerospace and defense and then that global services group which services all their other uh you know output is 24 of business so you know don't uh don't feel sorry for boeing because they're not making money on the jets themselves and by the way i saw that documentary one of my recent trips to i can't remember where on the plane what an absolutely i mean the the fact that some of those executives didn't end up with outright jail time is shocking the company was so poorly run and was so liable for some horrible situations related to plane safety and outright negligence when you look at that documentary. I can't remember what it's called. I'm sure you can find it spending 10 seconds on Google. Let's see, what else do we have? Also in yesterday's action, and I noticed this because I have a couple of holdings and some pretty small sort of future mining prospect uranium-type companies that I bought way below their high prices in the recent cycle. And they had one little pump of a rally, and then they've just been hitting one low after another for weeks on end here recently. Pretty depressing little corner of my overall portfolio. And the two companies that I had plus another one that's exposed to a specific rare earth play, It's a very similar price action, by the way, just going to one low after the other. And especially that ladder company yesterday, but also just everything across the space seemed to be rallying by around 5%. So the Uranium Eura ETF was up 4.3% yesterday. Rare Earth, the REMX Rare Earth ETF, these are not recommendations, just mentioning a couple of instruments, was up around 5% yesterday. It's like somebody just pressed a buy button across the space. Everything went up. Very interesting. to see that contrast with sort of flat action on the median stocks and that everything in this space is going up at the same time. I just thought I'd throw that in there. I certainly found it personally interesting as well. All right, and then we had the Israel election. A couple things about that. First, it looks like it is a very close vote, very uncertain who is going to emerge as the coming prime minister. And this is another, as somebody noted on X, this is another example of why we shouldn't use Kalshi or Polymarket it really for anything necessarily, but certainly for some of these election, you know, gauging the odds, the true odds of election outcomes. It had this guy, what was his name, God or God, yeah, Eisencott out with 56% odds of being the next prime minister. And within 24 hours, that collapses to 13%. People identifying very few accounts that are responsible for a lot of the flows in there. Looks quite manipulated. I don't know what they're hoping to get out of that. Of course, if you are heavily betting on somebody that is not going to achieve those odds, you are going to be losing money. So the idea would be you're trying to manipulate perception or manipulate reality. Similarly, the Cauchy and Polymarket got the Brazil odds incredibly bad. Although, to be fair, the market did as well. And what is the reflexivity across the market versus Polymarket? I want to say the market. I mean the Brazilian real, Brazilian stocks, their perception of reality, how much of it is controlled by being clever and understanding what the reality on the ground is and how much of it is controlled by the odds that they're looking over at the calci and poly market on. I don't know. It just – it does leave big questions around how much we can use these things to determine the odds. And I do put them up occasionally, things like the American election odds, but with massive grains and cinder blocks of salt because, you know, you have to use other supporting evidence like polls. And even the polls are difficult in the case of U.S. politics and have been very difficult in recent years. So, yeah, and we're heading into the midterms, of course, next Tuesday where I do think we are going to see a blue wave. But will it be just sort of more or less, as the polls reflect, far more overwhelming, or will the polls have gotten wrong with that difficult-to-measure Republican vote there? I think we did a decent – the base case is a decent blue wave with some of the things that I've mentioned recently, being very high up there in voter concerns on corruption especially. Although, of course, that could be sort of Democrats or Democratic-leaning voters universally lining up on the concern being corruption. But remember, U.S. elections are really controlled by that middle and large middle section of voters that are not really partisan or oriented towards one party. And if they tire significantly of one or the other side, they might get more motivated to get out and vote. Whereas those that are marginally pro, let's say pro-MAGA, pro-Trump, but have just not been really enthused about what they've seen of late, might just be a little bit less motivated to get out and vote. whereas the against side is more motivated. So that's my base case. We'll be talking more about it. There was a webinar we hosted yesterday. I will provide a link to that in the podcast episode description. We did a long-form run-through on the webinar of the odds, basically, of all different scenarios and some outcomes that might be likely under those scenarios. Did that together with a semi-colleague, because it's not my direct colleague at Saxo, but an international economist, Rafael Olsen-Amazis, with J. Saffer Saracen Bank, who has great thoughts on the different impacts across different asset classes, and as well as different specific stories from tariffs to the relationship with China and the AI trade, a lot of different things we looked at, rates, FX, et cetera. Okay, what else do we have? Gold sort of holding that $4,000. So far, it did dip below, but it's held before testing that absolutely key level. We've seen a silver rebound as well, but it hasn't even achieved the first objective, which would be a nice, strong rally back above that prior low of $54.80. I would say, locally speaking, to sort of neutralize this really significant slide we've seen of late, you need to see something impulsive into the $57.50 plus area, in my view, to suggest that silver is posting some kind of. Significant low here. So, you know, it is a key window for this type of stuff to develop. If it is going to develop with the FOMC up today, ECB there as well, if they're going to go dovish, that you would think would be at the margin supportive for precious metals, and the BOJ Friday, as well as where the dollar sits after these key central bank meetings going into next week. So it feels like there's a window here or something, a critical time frame to look for something significant to develop. Or not. I mean, of course, I think it speaks loudly as well. If we get through these key event risks and we just kind of stay status quo, that leads me to believe, to trust the existing trend more for now, if that is what we see. But otherwise, these types of event risks are often fertile grounds for new trends to develop, key pivot points, et cetera. Something to keep an eye out for across markets, really. And then, you know, we have this huge issue hanging over all markets, and that is geopolitics, the oil price. And the price for refined products. And nothing really much new there in terms of reality on the ground, I suppose. But we do have the Wall Street Journal talking about its sources saying that the U.S. is considering some kind of short, intense renewal, as I think is the wording, of strikes on Iran after the midterm elections. Is this just some kind of a negotiating stick from the U.S. side? I don't know. There's other reports. One was from LifeSquawk this morning talking about Qatar. I don't know if it's true, but there's other reports that the U.S. is considering some kind of negotiation stick from the U.S. side. is considering some kind of points of agreement on both sides where they could work on some kind of phased basis in coming days to establish some trust before moving towards the next round of negotiations. I really don't know where this could head. But to become a non-factor, we need to head a lot lower in oil prices and refined product prices. There's already a lot of built-in stress in the system from these very, very low inventory levels. And speaking of inventory levels, there's also natural gas to consider in Europe where the seasonal build has been poor. We've got cold weather coming in. We've got the TTF gas forward, the one that's most closely tracked, hitting new cycle highs here and just unimaginably expensive gas in Europe according to those forward prices relative to the U.S. where we've collapsed way below $3 on the natural gas contract there. I think it's weather-related. Again, cold weather coming to Europe. And it looks like it's going to stay pretty balmy across the U.S. for the couple weeks forward time frame that is sort of the maximum you can get these weather forecasts for. I should have added, actually, back – I'm looking over my notes here. And first of all, they're always a little bit too sloppy for me to pick up every single thing I've jotted down. But we did see some follow-through enthusiasm overnight that was not necessarily anthropic related but related to specific results from the key players in the AI hardware space. And that was SK Hynix reporting just these insights. And that was SK Hynix reporting just these insane levels of profitability, revenue growth, supporting the shares through buybacks, everything under the sun. Kospi was up 6.6%, and Samsung is up tomorrow. So another test for the whole memory space. SK Hynix is involved in that, what's it called, HBM4. I think it's the latest generation of memory. I'm sure demand is through the roof for that. But I think claiming visibility as well out through 2028. So that whole cyclical concern, you know, appears to be OK for now, at least according to their assessment of the memory market. Let's see. Let's see what happens. That's that's a big move we saw overnight there. And yields, not a whole lot happening. We did see credit yields coming in or credit spreads coming in very strongly yesterday. I think it was 15 basis points on the Bloomberg index. We track of the spread between U.S. high-yield bonds and U.S. treasuries. U.S. treasuries were sort of ticking a little bit higher again this morning. Looked like a little bit of a lazy correlation with oil prices. There was a really horrible five-year auction, the prior auction. But yesterday's five-year auction was actually quite orderly. Didn't seem to raise eyebrows or get comments in the headlines. It is about tonight's FOMC. Not seeing what we're going to get from that really at all. I really don't know what to look for. I really don't know what to say here. I mean, Warsh is trying to avoid providing forward guidance. He doesn't want to be seen as political. But if you're going to hike rates, wouldn't it be the time to do so? Here we are just ahead of the election. It does seem more likely we'll wait until December, but he won't want to flag anything. So, yeah, what do we do here? We do remember, of course, that the last inflation data point, it was hot. We saw the big pump higher in yields, higher in the dollar, and then reversal off of that. So it's an important event risk. And again, as I've said with some of these event risks, if there isn't anything that's surprising or no actual drama, or even if there is some degree of drama in these event risks, if the market was deciding it was going to do something, it will do that often regardless of what the event risk says. but it doesn't put the funds or the trade on until after the event risk is out of the way. So that's one of the key aspects of tonight's FOMC meeting. We did get an RBNZ meeting last night, and this was a big shocker because they decided not to go ahead with that rate hike that most believed would happen, including ourselves, just from prior rhetoric, et cetera. Really big shock to the Kiwi. We saw Aussie Kiwi, which was trading around 123.80, blasting all the way up to 126 at one point before receding back to around, I think it was 125.50 just before I came in here. And the Kiwi versus the U.S. dollar dropping around 1.25%, low 56s. So this was a surprising look. The bank's saying, you know, it didn't like this rise in yields, the implication of it for global growth, and had some concerns around that, even though it was adjusting its near-term inflation forecasts higher. So a big surprise there. We do have the Bank of Canada up today as well. They are also expected, around 80% likely, to hike rates based on Governor Macklem's comments. Did see an uptick in the employment levels or unemployment levels in the latest employment report, and it would be a significant surprise here if the Bank of Canada decided not to go through with a hike. Of course, they could also hike and provide kind of dovish concerns on the forward outlook. That might go some way to weakening the Canadian dollar if they did so. I would suspect that's about the most dovish this scenario could get would be to deliver the hike, just express lots of concerns just to sort of cloud what it is you want to do because maybe they don't know now with so many uncertainties building here around the global outlook as the RBNZ highlighted. But $1 Canada has receded all the way to that big round 140 area. It's been an important area for the $1 Canada historically. So it does kind of look pivotal here. And to my assessment here, or based on my assessment, I think the asymmetric risk is for $1 Canada upside. But it depends as well on the broader U.S. dollar picture. Then we have the ECB up tomorrow. Again, I think they lean dovish relative to what the forward pricing is, How they express that and how firm that dovish pivot might be, not quite sure I understand yet. But that is my sort of lean for that meeting there. And then the Bank of Japan, I'll talk more about that perhaps tomorrow. We did see the dollar rallying a bit more still. So we saw euro dollar down towards the lows there of the cycle. Low 111s, I don't think it quite took it out this morning. It was very, very close within a pip or two. And it's backed up a little bit. maybe not wanting to take out the low ahead of the FOMC. But the euro also very weak, sort of peripherally around against the other European currencies, most notably sterling of late, and we do have that UK budget today. Again, we're looking for the tone, the vibe, the sense of pragmatism. I think one of those signal issues is that North Sea oil, whether they open up for more production there, would I think be a very positive sign for the UK economy and for sterling as well. But this is kind of priced in to some degree with the amount that Sterling has appreciated here versus the Euro. But who knows, it could be some more in it. Certainly technically Euro versus Sterling, very, very heavy. There's not much range left to that, about 2% down to that. that zero spot 82 level, which is the low of the range since the Brexit vote these 10 plus years ago now. Hard to believe it's been so long. There was Aussie inflation out overnight. It was a little bit hot. That also was involved in that Aussie Kiwi trade, by the way. In any case, plenty going on on the macro front. So not huge amounts of volatility, except in the Kiwi overnight. We do have the yen trying to look a little bit credible here in this rally, except it doesn't look so credible if you look at dollar-yen specifically. A lot of that is dollar strength. But it's come back a little bit here, even versus the dollar. Hit 158, but it's come back decently below in dollar-yen. Euro-yen looks quite heavy. I think sterling yen is due for a move lower as well. Curious to see if this yen trade can develop properly post all of these central bank meetings this week. And of course, I think if we do have some kind of mediation success in the U.S.-Israel-Iran situation and oil prices can get crushed 10 bucks or more sustainably, that might feed even further yen strength. I didn't mention the Consumer Confidence Survey, by the way, which was out yesterday. And wondering if this is to some degree linked to expectations and hopes for the midterms, or if it's just random, or what is going on. Because it was a massive pivot in both the expectations and the midterms. So I think it's going to be a lot of both the expectations and the present situation to the upside. So we got on the expectations, a reading of 72.6 versus 62 expected. I mean, a ridiculous beat of expectations. And then this was versus 65.7 in September, which was revised up from 63.6. So instead of thinking we were at 63.6, headed to 62.62, we were actually at nearly 66 and headed higher to 73 almost. Similarly, on the present situation, 120.4 versus 108 expected. And that was versus a prior of 112-ish, which was in turn itself revised up two and a half points. So that's an interesting look. We'll only know, of course, in the wake of the elections and another round of these expectations or confidence surveys what's going on here. All right, getting on talking too much here. So I will round things off with a couple of interesting links. At least I always find these interesting. I hope you do as well. You can find them in the podcast episode description. One was a link in the Wall Street Journal to a little profile of Demis Hassabis. He's the mastermind of the original, what's it called, deep mind outfit that Google bought and became, I think, Google's head of whatever he's head of or whatever his title is there. I find him one of the most compelling guys to listen to on AI. So I just thought I would highlight this article. Follow up on what he's doing. He just seems like one of the more intellectually honest and sympathetic people that just seems to be just enormously intellectually curious about where all this could head and, of course, enormously intelligent. And at the same time, that intelligence and extreme intelligence doesn't prevent him from being somebody that communicates well. So it's really a unique combination this fellow has of all of those traits. I thought I'd pass that along. I'm passing along a very well-written. I can't remember who. Hat tip to who. Maybe it was in my own follows on Substack. Somebody who's written a Substack on this Elizabeth Holmes documentary is getting so much attention and it just sounds like a must watching. But one of the reasons I'm bringing this into the conversation is, by the way, it's Nathan Fielder documentary. It's called You Can See Everything. It's on one of the mainstreaming services and, again, getting a lot of attention. But I'm just fascinated by these types, whether it's her or the Bernie Madoffs of the world to a degree. Somebody, in the case of Bernie Madoff, somebody that's, you know, knowingly cheating everybody and just does it year after year after year. And, you know, how can you maintain that sort of facade? I think the interesting thing about Elizabeth Holmes is, is there a combination of being a complete liar and an inability to have insight into your own personality and to understand that what you're doing is lying because you have some other priority personally to whatever. It's fascinating. I think the reason I mentioned that is I think. I think there are potentially other CEOs out there, and time will reveal these CEOs, that are also convinced about various things that they know may not happen. And I'm here thinking of some of the AI-related names. Let's call it a Corweave CEO or whatever. Not that they're on the same par, but that there's some element, same level of self-delusion or lying as somebody like Holmes or Madoff at all, but that there is an element of self-delusion. Not that they're on the same par, but that there's some element of self-delusion or lying as somebody like Holmes or Madoff at all, but that there's some element of self-delusion on the ability of this to continue. As well as, you know, is Jensen Wong himself of NVIDIA saying the whole truth about things that might keep him up at night? How many NVIDIA chips are actually operational? Are there these so-called dark inventories that can't plug into? They have all this data, but they're, of course, going to present a flattering picture of things. Just, yeah, do with that what you will. I think it's. It's something I need to see, and I think many of you would be interested in seeing it as well. Then we have a super interesting one I came across. This was an FT Alphaville hat tip. Schroeder's, so the UK, what are they, an investment firm or whatever, the long-form assessment, and this is super important, of the U.S. pension system and how staggeringly large it is and important for the overall global equity market, even for the AI story. And it runs through. It runs through various scenarios where AI could be eroding people's ability to continue to find employment or could it affect their ability to contribute to pensions. In any case, if you need to know what's going to happen in the U.S. equity markets and in global equity markets, you need to understand what people's behavior will be in their pensions. U.S. private pensions, private pensions or U.S. pensions, U.S. pensions, basically, I think these are linked to individuals. So some of these would include also public. So some of these would include also public pensions for teachers, whatever public sector workers, but it's still linked to their private individual future, not anything to do with Social Security is what I mean by that, $49 trillion. And if you don't include the public sector pensions, it's still at $33 trillion, essentially the size of all global equity markets put together outside of the U.S. The U.S. market is, what is it, 50-something trillion. So massively important, and it runs through some different maths that you might find stark, but it certainly underlines that this passive bid for equities is completely existential to the outlook, whether it's good or not so good, somewhere down the road. All right. That will be my final comment for today. Again, do we get a pivot in the coming three days, FOMC, ECB, BOJ, and the anthropic IPO fuss? After we got a bit of a swell of risk on here over the last couple of sessions. And when I say pivot, I mean do we get a pivot back to the downside here as skepticism continues? We also have, of course, the key hyperscaling, three of the MAG-7 components reporting over the next two days. Or do we get something that encourages a comeback? There's that, and then there's the window of the anthropic IPO itself, how that is greeted, what kind of demand it sees. It looks like a really rich and important information value coming in here the rest of this week on how, of course, these events themselves, how the market reacts, and through sort of the week of whenever that anthropic IPO is floated. Stay tuned for all that, and stay careful out there. And I'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 and questions of all kinds. To reach out, you can drop us an email at marketcallatsaxobank.com. That's marketcallatsaxobank.com. Saxo. 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