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 hosts and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Hey everyone, it is Thursday, 29th of October, 2026, getting a very, very late start here in the podcast studio, but I thought I'd go ahead and crank one out today. There's lots to talk about. And I wanted to flag that tomorrow I will be doing a Saxo Market Call version of the midterm elections. We did do a webinar recently. I just thought it'd be cool to have a bit more of a free voice and a bit more of a casual voice and even inject various little historical comments and not to be constrained by a live audience, etc. So, and as well, I created a new slide deck that was based or intended for a live audience at an event tonight here in Copenhagen. So I thought I would use that slide deck and could pass that along to you and discuss it in a format. So I'll be putting a link to that PDF in tomorrow's podcast episode description. You can use it for accompaniment. Hopefully you won't really need it though, just if you want to listen to the audio only. So look forward to that tomorrow. I think just to tease it a little bit, I'll be putting in a little bit more on market bias, at least my market bias. What little there is. What little there is, I should say. And although there are a couple of key things to consider with this midterm election and the implications for the market, and as well as the potential for an earthquake scenario in which the Democrats make much bigger gains than is currently being priced in. And how much does that mean? I don't know, but I just think some support for that idea, even though I've been humbled in a couple of the recent election cycles by the poor polling. I think this might be a little bit different this time around because of. All right, let's get to the markets yesterday and overnight, importantly, because there was a little switcheroo on the risk sentiment with Alphabet's earning support. That'll be the key one to discuss in a moment. Relatively positive session on the sort of hardware, momentum front, AI, etc. Sox index up one and three quarters percent. We saw the NASDAQ up a little over half a percent. Equal weight index, S&P 500 equal weight. That is a lot of money. That is was actually flat, very slightly down on the day, even though the Russell 2000 continues to climb above its 200 day moving average, posting a gain of four tenths of a percent. So risk sentiment doing fairly well. It wasn't a lot of volatility around the FOMC, but a little bit. We saw the FOMC meeting delivering a statement that was largely recycled with needing to sort of alter the positioning around inflation because they had hiked last time and they weren't hiking this time. It felt to me like that inflation comment was a bit too much. It was a bit more on, you know, why are we, why are we pausing? We're pausing because we need to investigate what inflation is doing for, you know, for the next six weeks or whatever. So I was trying to pull some information out of that, but not really getting anywhere in the market. Didn't get anywhere either. It was in the press conference that we saw a little bit more between the lines. It wasn't arguably, it wasn't terribly strong stuff, but, you know, a few things were pulled out of that, out of the situation with Warsh's press conference, his wording on, you know, he's finding it encouraging that credit conditions have been tightening considerably since September. So, you know, already this, this idea that it's supposed to be that Fed tightening has a lag of nine to 12 months and he's already seeing something within the space of the, you know, the last week since the last meeting. And then his sort of prominent mention of productivity as a way for the economy to continue to grow solidly without necessarily indicating inflationary risks to a strong growth path. And, you know, this, this sounded more like a wish than a, than an actual outcome, but it is, you know, suggesting that he's looking closely at productivity, looking for an excuse not to be worried about inflation anyway, even though he's trying to, at the same time, shore up credibility on the Fed's ability and intent to fight inflation. But on the same front, he also, uh, said that, uh, he doesn't see the, the need to continue to hike policy rates to, uh, slow the economy to such a degree that it has to cost jobs, et cetera. So there's not this, this kind of, uh, uh, hawkish talk on inflation. For what it's worth, that was the, you know, that was, I think the, some of the key bits that saw the market reacting as it did. The dollar came off just a little bit. Uh, rates came back down just a little bit, sort of erasing the day's gains and maybe a little bit more at the front end of the curve. So we saw a yield curve, a steepening on that. It was not really particularly high on drama. And that's the part that didn't surprise me. Um, and then overnight we sort of saw the dollar reaction more or less getting erased, um, which was kind of interesting. Whereas the rate, uh, move stuck a little bit more. Uh, Bank of Canada, they did hike. That was less of a surprise. Uh, after the recent, uh, up, um, sort of upgrade in the hawkish talk, it would have been really strange if they had not delivered on their hike, just as the RBNZ didn't. Although the RBNZ had been hiking. And just failed to do a consecutive hike. And there was a closer vote. I just should have mentioned that in yesterday's podcast. Um, and there was a little bit of damage control coming back in as Braman, uh, the RBNZ governor was out saying, uh, sort of pushing back against the market interpretation a bit, um, and kind of tilting for a December hike. So with that, I wonder if, uh, actually the Kiwi might have a chance at a little comeback here. That certainly hasn't happened yet, but just watching Aussie Kiwi as the proxy for that, uh, potentiality would be quite interesting. Because it was, uh, quite a sharp, uh, move higher to these new 13 year highs in Aussie Kiwi and a sharp reversal would be, um, an interesting technical setup, but it has to happen before it's interesting. Right? So let's, let's wait and see. Um, and then of course we have the ECB today. That's basically coming out, um, uh, in a few minutes or within an hour. Uh, so this will be after, uh, or before you are listening to this podcast in all likelihood. Uh, link in today's podcast episode description, but a bit strangely, she had bandages all over her face. I had no idea what's going on there. Uh, maybe there's some kind of illness at play here. I don't know, but she's going to resign early in, uh, on February 7th. In fact, instead of serving out the rest of her term until October. And this is heating up the talk of who her successor will be. Not a lot of, uh, Euro volatility to say the least on this. Let's see what the ECB brings. Uh, again, my, uh, I don't know. My inclination is believed that they tilt dovish relative to what's priced into the interest rate forward expectations, but my goodness, the Euro has really been beaten down. So you wonder how big the surprise has to be to get a, a negative reaction out of the Euro. And there, I'm not sure I understand how big the reaction function could be, even if they are indicating that they may not want to, they really don't want to provide strong forward guidance for December, even though the market still thinks they'll pull the trigger on a December rate hike. Um, so we'll wait for that. Uh, among the, um, names circulating to succeed her as ECB president are the Spanish, uh, Pablo Hernandez de Cos, uh, Klaes Knotte. That's how you say his name of the Netherlands. Traditionally quite hawkish, but perhaps somebody that's turned a bit more, uh, pragmatic and political in recent years. And then Joachim Nagel, who's not quite the German that we're used to from the German central bankers and might actually be less hawkish or a history of being less hawkish than, and more so than the German central bankers. And, and more sort of practical and pragmatic and diplomatic, um, but less hawkish importantly than even Klaes Knotte with de Cos considered the relative dove among these, um, uh, these proper, especially, uh, de Cos and Knotte seen as quite experienced, technically experienced proper central bankers, uh, relative to the very political Lagarde, who was not at all a central banker. So there might be actually be somewhat more listen and interesting to listen to, uh, these press conferences once again. When one of these people or somebody else is at the helm of the ECB, certainly not a, uh, a position I would envy, um, as the new person takes over early next year, again, ahead of schedule, but we just kind of segue fully into macro. So let me just round out the macro and FX talk, and I'll get back to single equity stories where there's, there's quite a bit going on with this, uh, uh, hefty, uh, uh, earnings calendar incoming here. So we have, uh, by the way, we had the UK budget announcement yesterday. It really a damp squib, certainly no market reaction there. Uh, they're seen as being quite responsible. The, the so-called fiscal headroom is slightly lower than it was previously, meaning they, they, you know, they're being a bit more aggressive on the spending side, but, uh, not enough to, uh, un, unsettle, uh, UK guilt markets. Raising, uh, uh, savings and, uh, property related income taxes, not, not actually on wages, but on, uh, I guess on capital gains or savings. I don't know what exactly that means. Personal savings versus just capital income, uh, and property income taxes. And there was a bank. I think surcharge is going to be raised and extended for some period of time, some small adjustments in spending, but the bigger spending review is this 2027 review that needs this sort of a biannual thing that they do. And, uh, you know, that's the, where the bigger priorities and bigger shifts and where they're focusing spending, uh, will happen. So, uh, again, it was an odd event for the market, but of course it'll be something that's monitored over time as the, um, as the economy does what it does. And as the attack, both tax revenues come in and the spending levels come in. And in the coming months, uh, other where, otherwise, um, of course we have the BOJ tonight. I think, uh, given where we are with dollar yen creeping back up towards one 58 and even above at times, it's really relying. Of course, the bank of jam will have to deliver something that's relatively hawkish to keep a lid on these, uh, yen crosses, especially dollar yen. If the dollar is firm here, uh, and then maybe up to the ministry of finance to. throw its weight behind things with a little bit of intervention warnings or otherwise. I've been really surprised how difficult it's been, given the recent sort of back off in interest rates, to get some of these yen crosses even lower still. So, you know, we're still waiting, sitting on our hands, waiting for Godot there for the big yen rally. Let's see. And then I think a final comment on the FX space. To me, the Noki, the Norwegian Krono, feels like it's gotten just a bit too aggressive here in its rally. It has been insanely directional and persistent. That's not to encourage anybody to step in front of it at all. I just wonder if we're getting to where it's going to have a harder time going higher. A few signs of it coming off today. That makes sense in line with gas and oil prices coming off a bit as well. And the Noki Staki, I think, is an interesting way to look at this potential turnaround. Because if you see a bit of a sentiment shift on the euro, if it's been over, sort of overdone this euro sell-off. But ironically, the Swedish Krono might do better than, might keep track, it might even do better than the euro itself, especially if peripheral yields calm down and there's more hope on the economic side. Staki could continue to outperform the euro, which it has been doing. It's something we've been highlighting. And it's almost reached that 11 area and doesn't really look to me like that necessarily has to stop the downside. The 200-day moving average is down around 1094 or a little bit above. It seems like a first potential test of where support might come in there. But then if the added angle here being if the euro is positive, if the euro is making a little bit of a comeback here despite the ECB, et cetera, or because of the ECB, I think Noki would be more concentrated. And Noki Staki is a little bit independent of the euro. So just some thoughts on European FX there as well. Now let's get to some of the single stock stories. Of course, rocking the broader averages even overnight. And we had Google out minus 10%. This was actually a quite ugly look because they've massively increased their capital expenditures. We all know that. But at $50 billion, the rate is getting quite hefty. At the same time, the revenue was a miss on expectations. And that's just a no-no. It's one thing to slightly miss on the most aggressive set of forecasts. But just to outright miss on consensus is not great. And some of the focus is on whether their search business is starting to get eroded by this whole AI phenomenon. And so that's, of course, their cash cow. And they're at negative cash flow at this point anyway. So this is, you know, Google obviously saying, look, investment-wise, AI is our future. But in the meantime, it's been making all of its money off of, or most of its money off of search, which remains a key for the financials there. Certainly seems like somebody was smelling out something ahead of this event. Because it was very much on the defense of the stock price ahead of this, you know, crossing well below the 200-day moving average. And now we're down another 10% after hours in Google. That's some serious market cap when you're talking about, I'm forgetting the numbers, that a $4, almost $4 trillion company was at least recently before this number. Microsoft, a different vibe. They are still positive free cash flow, by the way. Their Azure growth looking great. And they were actually up a little bit after their earnings report. Samsung. Should not repeat. Hynix is, SK Hynix is a strong performance. Apparently the shareholders are frustrated here because they're not coming out with a nice, generous profit sort of recycling plan into buybacks and dividend distributions. Extraordinary ones, that is, like SK Hynix has done. So that may be a temporary thing. I think maybe they're also on the less, they're a bit further behind on the HBM, latest version of HBM than SK Hynix is. I don't know anything on that latter bit. I'm just guessing. That was one of the especially positive things in the SK Hynix report. So take that for what it's worth. And then, you know, the whole sort of software as a service base, very interesting after the close yesterday because service now reported and is down over 18% after its report. Still growing, still saying things like AI momentum continues to build. And yet the, just a slight miss, I guess maybe because it's had a 100% comeback, it's going to go down from the lows and this is the kind of thing that seems to happen. Maybe it's just about, you just have to blast every single door off of everything. When you've had a recent good momentum, Ron, I don't know. I didn't necessarily see the bad news in the internals, but that was an ugly look, that reaction for sure. And you see the contagion all the way across the, of the software as a service space. I shouldn't say all the way across. Every name that I checked briefly was down quite a bit after hours, even though they had no earning support or anything, Salesforce, Adobe, Intuit, et cetera. So it could be an interesting session for that relative trade. Once again, the software as a service versus AI trade here. Eli Lilly out. They're reporting today, actually ahead of the U.S. Open, which we've been forgetting to mention is of course been an hour early this week for us here in Europe because of the time, the clock differential that ends with this week because the U.S. sets its clocks back at the weekend. But Eli Lilly up 4% after reporting earnings. At least initially it was. KLA Corporation up 3%. And then here was another single story. It was the worst performer, I believe it was at least, on the S&P 500, certainly up there at the top one or two. Down over 20%. And that is F5. This company, I remember actually investigating this company. Somebody was asking me, my boss was asking me actually, probably 2003, to look at network sort of network companies, network hardware companies, and to assess which one. And I thought it was the best pick among a handful of these. I had actually some technology experience related to this, having some work experience in a company that made network switches. And I remember this name F5 as being the top of the lot. And they did very well back then. Share price was around 10 at the time. Now it's way up in the hundreds. And I'm forgetting where 300 and something is where it closed yesterday. But interesting. Interesting company. They have transitioned to selling a lot of software as well as their hardware. And what do they do? It's kind of hard to describe if you're not familiar with networking technology, but they're able to, via hardware, to sort of inspect all the packet flow going through their devices. And I guess they're using software in addition to this. And just to inspect these flows and the implementations basically and the security of these network flows. So they can, what does my notes here say? Optimize. Secure and manage application and API traffic. So it's sort of monitoring all this. And it just seems like with all of these APIs that are now going to be tapped into sort of automatically by potentially by agentic AI applications, you know, just the multiplication of the potential for the volume increase here must be tremendous based on AI agents. And they're getting a big hardware upgrade cycle. So their hardware business was up 30%. And it's been a growth star recently. I think it was their revenue for, oh, no, it was not the revenue. The revenue continues to grow. They've picked up a little bit growth-wise recently. The hardware revenue has picked up a lot. But it was their earnings that were the focus here and the margins because of their quote-unquote costly AI push. Well, it makes sense to me if they're coming up with some good solutions that address this AI problem. So I'm a bit intrigued, actually, probably still a little bit overwhelmed, but one of those ones to watch for whether people get a bit too put out about this and whether their revenues continue to pick up in growth in coming quarters. Not trading at wild PEs or anything. I'm thinking the 20-plus range for the forward PE. It's not a trade recommendation, just something I'm putting on watch. It was just for an idea. I mean, this company has been around for a while. It was born during the whole internet build-out thing in the late 90s. Early 2000s. Of course, got a wild valuation, collapsed, and has come back from the ashes of that by over 1,000%. If you were able to cherry-pick the lows there, $2 or whatever it was. $115 million in revenue, annual revenue for 2003. We're at a run rate of $3.4 billion. Now they have some very sticky customers that have very sophisticated solutions that they've had to program into the F5 hardware. Kind of an interesting business and one that sails under the radar. That doesn't get a lot of focus. It did have a recent run-up based on the general excitement in the data center space because it is involved in that to a degree. Hit its 200-day moving average, by the way, on that run lower, minus 20% in one session. Pretty ugly look for the day, for sure. That pretty much rounds out the single stock stories. We have, of course, Amazon.com up later today. I've mentioned a few other names in recent days, and I haven't got those in my notes. But for today's podcast. But, of course, look at your earnings calendar for what's incoming. Amazon, I'm sure the focus is going to be on that spend, as well as the metrics of their cloud growth and everything else related to AI. All right. Getting to the end of the roundup of market action. A slightly different vibe coming into this morning. But we did see, I mean, in Asia, there wasn't a big contagion overnight. In general, cross-risk sentiment, it wasn't that bad. Nikkei was up quite solidly on the day in Asia. For example, so let's see if this continues to spook the space. uh, this, uh, this alphabet report and we'll see how things, uh, you know, the, see how things develop with the Amazon earnings. So in terms of today's links, and I have a couple of interesting ones, uh, Aswath Damodaran, I'm sorry, I don't know how to pronounce his name is out. He's the valuation guru wrote the big, uh, what's it called? Investment valuation book that I have on my shelf at home and have only cracked a couple of times, but I know the principles, uh, valuation of Anthropic. Um, now huge grain of salt there. He also did a big piece and he probably did this because I'm sure his piece on SpaceX got a huge focus. We talked about that one back then as well. He said it was a fair value. Could be something like 1.3 trillion did admit in that figure 1.3 trillion for the market cap of SpaceX, that there are all kinds of massive assumptions. And I think massive assumptions is the name of the game here, but I think it's still a useful exercise and maybe something worth reading to just note down some of those, what some of what those assumptions are, because as we go forward, um, probably the stock will trade way too high relative to where it will eventually settle. And as the quarters roll in, we can get a sense of how off in either direction those assumptions are. And you can learn a lot about modeling what the company might be worth just from the exercise of, you know, the rigorous application of how things should be valued. Now, again, input assumptions, huge question mark, the rigorousness of the overall, assuming those values are correct of what the current, uh, what the company should be worth is something entirely differently. Uh, there's certainly a lot of shade thrown by Michael Green who, uh, who put a post out on X, uh, and he says, when did Aswath stop caring, uh, apparently making fun of his assumption around the weighted average cost of capital. So take it for what it's worth. It's, I think it's worth something. Then we have a, uh, South China morning post article on, uh, this, uh, Brussels wanting to, uh, or wanting industry, uh, to ditch Chinese supplier, but businesses in Europe are pushing back. It's this classic, um, you know, industrial policy question that the U S is grappling with so mightily and it's mighty corporations are also trying to push back who gets their way. Uh, is it about sovereign safety or is it about, you know, optimal tuning of the economy at the risk of those vulnerabilities that China having, uh, you know, complete control of certain supply chains that are existentially important if they were cut off or if prices were jacked to a very high levels, et cetera. So that's a, uh, that's one worth reading there. Uh, and then, uh, sort of along the same lines, uh, Michael, every forwarding a, um, a post from some John, John Claudio, I think it says Torlizzi. If I can, I can't read my own handwriting sometimes talking about, uh, he was at a conference and making the point, I think it's a very good point. And it's a, it's a, a point that can lead to a tremendous research and what companies can do something about those various supply chain issues that Brussels is pointing to, especially in rare earths. When he says this, uh, John Claudio, who is apparently a, um, advisor to the Italy's ministry of defense and something called, uh, the Machiavelli foundation sounds rather intriguing in any case that this whole idea that we can just stockpile has like strategic stockpiles of these rare earth misguided. First of all, they're in tiny amounts. So stockpiling can aggravate the price to just unbelievable levels. And the people, China that control those, um, uh, supplies could, could, you know, turn up prices to, to whatever levels, if there is some kind of important run to establish the, uh, stockpiles. So rather than doing that, you need to work on vertical integration. It's a lot of what you see in the efforts to support the likes of a Linus, uh, materials or whatever, title is the Australian mining company, uh, and other rare earth providers in the U S it's early days, but there are a lot of these, these trades are a lot of these companies out there. And it'll be intriguing to see what kind of announcements, if any crop up on potential vertical integrators looking to, you know, not just create stockpiles, but to create mines and to own the full vertical supply chain from digging the stuff out of the ground. But most importantly, or I shouldn't say most important, just as important, the processing and the expertise around that process processing to get the finished product that is then used in whatever final device in that supply chain. So, um, something to think about there. And, uh, again, my FX trader piece from today, it was put out before the guard announced her early retirement from the ECB presidency, but that doesn't seem to materially alter anything as we discussed today. And then I think, uh, this is a sort of a, uh, a story that doesn't have any market relevance at all, but I think it has the relevance, uh, socially. And it's fit somewhere with the impulse and the interest among younger generations to have physical manifestations of things that they like. And what do I mean by that? It's especially in things like music where it's, uh, you know, you have a subscription to a streaming service, uh, and yet you have no physical ownership of some of this music that you just love. And it's an important part of your life. Uh, if I turn off the subscription or if I suddenly can't afford it, I don't have access to my beloved music. So they like to buy vinyl LPs, for example, especially, but potentially, or apparently even CDs in some cases and even cassettes. Uh, and I think this is a, along the same lines, but a bit different here, a bit nuanced. And that is a wall street journal article about a Harvard, uh, Harvard university humanities 10 course. Now, I don't know, this is a case of a little word of mouth, a little social posturing, and it's sort of like a, uh, bragging rights. If you go to this class and pass it, because apparently it's exceptionally difficult, but it is a humanities 10 course that runs through massive volumes of classic all the way from classic up to more modern 20th century literature and all of the philosophical and deeper themes around all of these bits of literature. And then sort of circles back to, I think it starts with the odyssey and it ends, uh, chronologically, uh, in recency with, uh, something like, um, James Joyce's, uh, Ulysses and then circles all the way back to the Iliad. Uh, but just maybe a sign that people are finding that somehow it is rewarding to be challenged by the need to actually think about stuff instead of having everything delivered to you by the AI, that sense that the AI is enfeebling us. And by taking such a course, you're going to feel like you've establishing the mental muscles and, uh, thinking mental, just mental muscles, but sort of the, the spiritual and thinking, uh, richness, uh, of that from, uh, from literature. I find it pretty awesome that they're doing this. Of course it could risk creating, uh, what we've always had, which is kind of this intellectual overclass and, and people signaling to one another about what they know because they've read X, Y, Z. I don't know. I just thought it was an interesting little tidbit on, uh, one of these social trends that may be afoot out there. All right. That is a wrap for today. I usually like to end the podcast with, Hey, you know, we need to focus on this, that, and the other. Um, it just seems like we're bumping around all over the place with the different incoming bits and pieces. I do find it fascinating. This Google, uh, or sorry, alphabet, uh, miss last night. Is that going to provide a negative spark for the market would be my key question coming into today and the balance of the week. Uh, the ECB of course is important and the, how the, how the world and the currency market reacts to the bank of Japan is as well. It's all, uh, interesting stuff. Let's see where it takes us. And I'll be back tomorrow again with a Saxo market call that we'll do an extensive us midterm election preview. Stay tuned for that and have a great one. Bye for now. 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 market call at Saxo bank.com. That's market call at Saxo bank.com. Saxo serious trading worldwide.
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