Europe wobbling again as US posts another all-time high.

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 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 Wednesday, 7th of October, 2026. Couldn't get in the podcast studio yesterday to do a podcast, but here we are. And we have another positive session on Wall Street with the new all-time highs. The session itself, sort of intraday, didn't look that impressive, but who cares, I guess, if you're a bull. We're up around half a percent on the NASDAQ 100, a bit more on the S&P 500. No big signs of divergence in terms of the S&P 500 equal weight, but the Russell 2000 was off over half a percent. Kind of interesting to see that opposite development of the S&P. And then the SOX index was only up 0.34%. So semiconductor is not broadly leading the situation here. But a bit of a vibe shift, if you will, overnight in Asia with Nikkei off almost a percent, Kospi down 2%, and Europe off to a rough start this morning. Not sure what the attribution is there. Perhaps a little focus on sovereign spreads again. We had yesterday a solid improvement in French debt yields, where we saw the 2%. And then we had the S&P 500, which was up over half a percent, and the S&P 500, where we saw the two-year coming in sharply, the 10-year as well, the Germany-France 10-year yield spread tightened all the way down to 127 basis points or so. We're back out another 10 basis points this morning. One of the news stories leading to an improvement in the picture was Le Pen piping up with a budget proposal that was supposedly more aggressive than the one that's in circulation now with Macron's government. This obviously looks like a populist party that's trying to talk fiscal responsibility. Some criticism here that the plans, which her plan, that is, which touts these big headline numbers on a reduction and some kind of promise to get below the 3% deficit level. But it would be doing things like cutting contributions to the EU. And at the same time, Le Pen is out calling on the ECB to intervene to get French spreads lower. There's a little bit of irony in there. See if you can detect it. And then the other cuts would be to things like, of course, stripping immigrants, and so on. And then the other cuts would be to things like, of course, stripping immigrants, stripping immigrants, and so on. And then the other cuts would be to things like, of course, stripping immigrants, of basic social care and things like that. And on the one hand, some tax cut calls, which would be expensive, and this insistence that she wants to maintain this 62-year-old retirement age, which looks completely out of whack with reality, people living as long as ever and a large generation there in that 60-plus category. By the way, on those taxes, and this is definitely a populist issue with oil prices and gas prices. Whether it's oil prices, whether it's gas prices, whether it's So France has a 20% VAT, a value-added tax, works a little bit like a sales tax, that they add on top of excise duties on fuel. And those excise duties are massive. I'm bringing this up because you're talking about in the U.S., Trump was talking about eliminating this ridiculously small 24 cents per gallon, and that's flat. It doesn't scale with a price. It's not a percentage. 24 cents per gallon federal tax on diesel and even allowing the use of so-called red diesel. In the U.S., red diesel is apparently colored because it's meant to only be used, I guess, for agricultural machinery or whatever. Just, you know, desperate measures here, obviously, ahead of the election to any incremental change that can be seen as progress on the oil price. But back to France, we're talking about, in the case of diesel, and it's higher actually for regular petrol, but 61 cents, euro cents, that is, per liter. So multiply that times 3.9 or so for the liter to gallon conversion you're talking about, plus the VAT. You know, $2.5, getting towards $3 per gallon on the French tax. You can see why this could be an area of interest. Obviously, those were originally assessed because of Europe's traditional dependence on imported sources of fuel. 67 euro cents per liter on a normal petrol. But, you know, what she touted as how much this could bring down the French deficit numbers is challenged by many, saying, look, the savings assumptions are very aggressive here. So this issue is going to drag on, but at least, you could argue, at least a populist party is talking up the need to be more fiscally responsible. But again, yields are widening out, 137 basis points. I had to scratch out the number that I was going to say there a couple times this morning because it started a lot lower. Still an issue that needs to be tracked, and still an issue, given the direction of Europe politically, that we need to follow over time. And we're seeing the impact here in the currency market, pretty volatile. So a big improvement, a big jump, at least, off the lows in the euro. Yesterday, euro dollar was trading up. I think the high was 112.77 or something like that yesterday. And we've seen it back below 112 this morning. We're seeing euro sterling posting. It just did tick below that 84.55 level from back in July. Therefore, the lowest level since early 2025. Not much on the chart there in the way of support. Very persistent move here, by the way, before zero spot 82. I think that trend is looking pretty well entrenched there. Euro sterling does tend to move in a very impulsive fashion. And even euro yen under pressure, the bounce back in yields saw the yen a bit weaker overnight. We're still at 158 plus in dollar yen, though we've come off the highs. And that 200-day moving average, by the way, was tested once again, 158.50. So really critical resistance area for dollar yen here. And euro yen under pressure. Euro just broadly under pressure here. And then again, the focus still on where does this go? There's the political side, the credibility side for France in terms of these yield spreads. There's also the issue of long US yields. I still will maintain that this is a critical factor for markets. I do think that's why we have seen sort of the median stock out there doing poorly. And especially some of those stocks that have been a great, great deal in the last couple of years. So I think that's why we have seen some of those stocks that have been a great deal in the last couple of years. So I think that's why we have seen some of those stocks that have been a little bit sort of passively from obviously enjoying those passive flows. Let's take the cost codes of the world, other stocks, where the multiples were just so nosebleed relative to the yield on longer term US treasuries. Finally, I think it's paying the price. I mean, maybe they're growing a little bit, but the multiples just look too ridiculous relative to development's yields. So that is, we've seen a big revaluation in some stocks, and especially those types of stocks. And the median stock has not done very well. In fact, as I said last Thursday, upwards of 45% or so are in a bear market relative to the 52-week highs. And so there's this very narrow set of tech stocks, high cap stocks, that is taking the averages to these record levels. I'm still concerned. There was a pretty boring session yesterday, intraday, despite the new highs. You could argue you have a slight little shooting star on the, for example, now I'm forgetting whether it was the S&P or the NASDAQ. It was NASDAQ at 100 I was looking at when I saw that. But let's see. These things don't have to mean anything necessarily immediately, but I do think this is a concern. Of course, yes, if we get yields suddenly crushed lower, let's say the CPI inflation print is somewhat benign next Wednesday, we get positive Hormuz traffic news or a new flow out of the Hormuz Strait that's good. Oil prices are crushed 10 bucks a barrel lower. And the broader market starts to rally again, then you have a setup for this bull market to continue in the near term. But we are heading into earnings season next week and the week after for the bigger companies. Could there be a little bit of hedging ahead of the season or will there be a bunch of call buying? I don't know. But it is a really critical one, it feels like, for where we are with this market and these divergences we've been discussing. By the way, on the last note on these 24-year highs, essentially on the 10-year and 30-year in the U.S., that direction is critical as a potential aggravator for financial conditions globally, and in particular back into the whole European situation, although that also has its own dynamic. It's just when U.S. Treasury yields are going higher, it is a global phenomenon. But we do really, the next event risk is next Wednesday's CPI release for September. But we do have the FOMC Minutes tonight. If there's some pointed out, I guess it could impact the front end in the U.S., which has come down. And that has provided a little modicum of relief, I guess, to the market. The FOMC anticipation is at a relatively low compared to where it was at the recent highs. Yeah, what else do we have? There was also the news yesterday, and this saw a bit of a move in the market, and the yen as well, a weakening on this, that Japan's GPIF, that's the huge, world's largest pension fund, essentially, did not discuss allocation of assets at the September meeting. There's a couple ways to read this. Obviously, that sounds bearish for the yen, if it means that they're not bringing home flows and investing more in Japan. That could be a concern. But supposedly, they did discuss it at August, the August meeting, and that was a meeting that was unusually timed. So if they discussed it in August and made the decision, why did they need to discuss it in September? So in other words, nothing burned is the risk for that particular news item looking at the yen here. And if we are rolling over lower in front end yields, it just seems like, and the long yields stay benign in the US, looking for room for the Japanese yen to rally here. We have seen a little bit of a re-aggravation of the whole oil situation. There's a lot of talk of Hormuz traffic normalizing to a large degree relative to where it was prior to the outbreak of this war. Iran is not getting oil flows out. That's one thing. And that's why it is sort of existentially threatened here and is probably why it's making a nuisance of itself with a string of attacks apparently on shipping as it tries to get through the strait. And we have massively high shipping costs. What was I saying? A captain is willing to captain a shipping or a tanker through there. So, you know, the oil is getting paid on the order of $100,000 a month. I read this morning. And again, the insurance rates are very high, the cost per day, etc. And you have this incredibly backward dated curve. So if you're not prompt oil, you know, oil delivered and booked right now, so-called dated Brent, that's trading on the order of $125 a barrel versus that front Brent month, which is now the December month contract, I should say futures contract is trading at around $102 per barrel. So, you know, it's a lot of work. So, you know, theoretically, we're seeing flows normalized, but there are a lot of issues around all of this with the insurance costs. There's still the nuisance factor and the actual risk factor of Iran attacks, etc. That's making the situation still a bit dicey for energy markets. Last notes on commodities. This El Nino reading, it ticked up again to a new record, 3.2 degrees up 0.1 degree on the week. And we're starting to see weather implications for sugar. So the weather patterns are changing. The weather patterns across the tropical regions seem to me the most heavily impacted and back into Asia. And this is hitting, seeing sugar hitting its highest levels. And I think it was since 2024. But we'll see what these impacts are. They should be hitting through much of next year with this El Nino phenomenon. Actually, that was not the last a little bit on commodities, because I will relate what I said to sorry on effects and rates and commodities into gold, which is, you know, the price chart is not terribly interesting. It's looking heavy. It looks like it wants to test down to that $4,000 level. But buyers are not waiting around. They're plowing into these gold ETFs where the holdings are rising to, I think, as close to the highs of the cycle, where the price action has been quite negative. It's very unusual. Most of the time, those ETF holdings sort of track, directionally speaking, the price. We have China back tomorrow from its long golden week holiday. Could this be a pivot point for gold? Something needs to pivot soon. Otherwise, again, it looks like we're in for a full test of those. Otherwise, again, it's a pivot point for gold. All right, a couple of single stock stories. To round things out here, we had Marvel Technologies. Is that their name? Marvel, M-A-R-V-E-L-L is the spelling there, with an investor day yesterday talking about the potential for $70 to $90 billion in revenue for 2031. I assume that's their financial year ending in 2031, which is August. Not that that matters, but just to relate that to where they are right now, which is anticipation that this year will. They will have been, through August of this year, they will have been at $9.4 billion. So a company that is expected to do up to almost 10x their revenue over the next five years. That's an aggressive forecast. The market responding to it, and it is largely priced to get there as well if you look at the valuation of the company, was at $250 billion market cap on the current run rate of $9.5 billion of revenue. Then we had SpaceX out in talks, apparently, with setting up one of these financing. It was with Apollo, I believe, to buy $40 billion of NVIDIA chips. And if you think that sounds like a lot of chips, it was a lot of chips in the year for NVIDIA ending in January 2024, when the revenue was $61 billion. But to the year ending January of next year, their financial year ends in January. That's why I keep mentioning January. It is expected to be at $411 billion. So that would only be about 10% of a run rate of current revenue. And these Bloomberg forecasts have it penciled in in the forecast that they expected year-end 2029, so into January of 2030, is over $1 trillion in revenue. I'd be amazed if they get there, but that is what is built into expectations. And NVIDIA's market cap is nearing. It's not that near, but it's getting fairly close to $6 trillion. And Elon Musk himself, with this run-up in SpaceX, by the way, not entirely sure what that's built on. Is it his plans to do this, what's it called, StarMind network, this loopy idea of space-based data centers? I don't know. He's getting worth. He's almost worth $1 trillion as of yesterday's market close. By the way, I've been meaning to mention this. This was out a couple days ago, maybe even a few days ago. But Tesla moved a. I guess it's an unveiling event for the new Roadster to October 15th. And this looks like it could be some kind of wild stunt here, where they decided the reason for moving the event was due to weather. And this is aggravating or heightening anticipation that there could be something in this Roadster like it's a hover car or something. Because why would you need weather if it's just a standard event or a standard unveiling? I don't know. I just thought that was an interesting news item. And yeah, I think more interesting for Tesla's actual on-the-road business is this Semi and whether it takes off. Doing a little bit of a deep dive on their batteries. So they touted this, I think it's called the 4680 battery format. So basically Tesla makes these little, traditionally made these little batteries that looked a little bit like AA batteries. And this new form factor is a much sort of fatter, squatter battery. I don't know if it's more squat. It's certainly fatter. So bigger. Cylinder, if you will. More like a, I guess, a D battery, if you're familiar with D batteries. It's the leading edge of what it could achieve. And since then, cattle. So the Chinese company has just, you know, gone light speed ahead of everybody else in terms of battery tech, including ahead of Tesla. So, you know, is it going to be licensing others or it'll be using this 4680 battery? As far as I know, they're committed to this 4680 battery format. For the Semi. But could others step in with better battery tech or could they license it? I don't know. But I think the Semi, long story short, is a more interesting, you know, commercial prospect. Not that it has anything to do with Tesla's stock valuation, which is based on all kinds of other stuff on top of that. Anyway, too much on that. Let's go to the links for today, which I will put in the podcast episode description. There was a couple of interesting ones. One, the latest must read I've found is from Liaquat Ahmed, if that's how you say his name. He is the writer of The Lords of Finance, which is, if you haven't read it and you consider yourself a participant in financial markets or financial market history, you have to run out and get a copy. It's a masterful account of the whole lead up into the Great Depression with the key central bank figures of the world and in the U.S. I'm forgetting all the names off the top of my head. The U.S., France and the U.K. I can't remember. I can't remember who else was involved in the key story there. Really, really great stuff from him, but well-written and authoritative. So this one is about the 1873 Depression, which was very remarkable. It was sort of the hangover from, I think, the first round of railroad financing. You know, you had mass deflation. You have the gold standard, all this stuff playing its part. The first Great Depression, and that's just my vague recollection of what the 1873 Depression was. That could be off. But it's called 1873, the First Great Depression and the Making of the Modern World. Looks really compelling. And then this is not to spread rumors, but just coming from Wall Street journals, it has – they're not what they used to be, the Wall Street Journal, I would say. They're a little bit political. But I hadn't really tracked this. I did note that during Xi Jinping's visit to the U.S., there was something about he was insisting on these long – sort of rest breaks during some of the negotiations or the day's events or whatever. And there's a little audio run-through of some of the things that are leading to rumors about his health. I don't know what you can use it for, but my goodness, of course, it would be quite remarkable if we're looking at a different leadership in China. How much of his – is China's leadership a facade of this sort of supreme leader and how much of it is – is he actually that supreme leader? I have no idea. Then we have, this is just a news item. I don't have a link, but Mistral, the French AI company, has released its latest LLM, Mistral 4. And I love its name. It's called LeChonc, a one trillion parameter model. So they're trying to step up with their higher performance levels, and they're claiming better performance than some of the Chinese competition. And then Michael Berry out with a recommendation to a paid substack. You have to pay for the posts. There is a teaser there. I put the link in there. It is, I think it's a $35 a month substack, so it's not cheap. But, you know, if you're thinking about should I or should I not invest in NVIDIA, what's $35 in terms of research? Again, it's not a recommendation or that this person is right. It's just we have to put these things in perspective here. But how is it touted? The writer of the substack says, well, it's part one on NVIDIA. In this series, I will discuss NVIDIA GPUs, revenue, quarterly reports, Rubin, data centers, OEMs, high performance, and more. Hyperscalers, neoclouds, and how they are all connected and serve to sustain the most important machine in the markets right now. So, you know, again, given that anticipation or supposed forecast of over a trillion dollars in revenue within five years, or reaching over a trillion dollars run rate in revenue within five years, critical stuff to consider. All right. That's a wrap for today. Let's see where things are headed. There is a little bit of risk-off vibe here in Europe today. I'm curious. To see how this develops throughout the day, if it's just drip or if it's spreading and actually started in Asia, if it sloshes over into the U.S. session. Not sure what the catalyst would be, except if we have something obvious like, you know, a big aggravated rise in crude oil prices and otherwise. In any case, stay careful out there, and we'll be back hopefully tomorrow with the next Saxo Market Call. Thanks, Paul. This has been the Saxo Market Call. 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. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.