Geopolitics and US and European yields in the spotlight

Welcome to the Saxo Market Call. Before we get started, it's important we emphasize that the views and opinions expressed in this podcast are those of the hosts and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Hey, everyone. It's Monday, 24th of August, 2026. And I think there's a lot going on that I haven't talked enough about back in the whole grand macro strategy angle on things. I think a lot of this brought to the surface over the weekend with this US-Canada standoff. All these issues just continue to sort of, you know, trundle along in the background as really structurally critical. And also structurally critical is the status of Iran. I think some of that is going to be coming to a head in the coming months. And a very interesting, you know, angle on this with the economic war so-called against Iran that the US is reporting it will launch. What does that mean? You know, Scott Besson put it in an FT op-ed. I will put a link to that in today's podcast episode description. You know, basically saying, look, we're not going to allow those that enable Iran without being punished as well. And the number one enabler of Iran, financially speaking, and the lifeline of absorbing its crude, exports is China. So how serious is this US threat in terms of going all in against Iran via its so-called enablers, namely China, and those that, as Besson says, facilitate the flow of finances, even international flights. I was actually looking at an overview of all the flights coming in and out of Tehran. I was surprised at the number of countries, you know, no major surprise that, of course, fly to places like Russia, some other spots in the Middle East and Iraq. And, of course, China, but as well, even to places like Thailand, India, Turkey, et cetera. So there is still some level of, quote, unquote, normalcy of that type of commerce and that type of traffic. Let's see where this goes. In terms of the US-Canada standoff, now it's, you know, people can say this is really not that significant. It's, you know, the 50% tariff headlines, that's just on $20 billion worth of, you know, goods going back and forth between the US and Canada. But if you look at the types of things that the US is asking, you see how serious the US is about, you know, viewing the Canadian relationship and Canada's status in the world as something that needs to be subservient to the US's geostrategic position. And there was a great graphic my colleague Ola sent along to me about these trade negotiations, where it's not just about tariffs on lumber, and this kind of thing, but about these other issues. So, you know, there's 13 points on this list. I'll just put a couple of them up here for illustration. Number one, the veto over strategic infrastructure partnerships. That's clearly the sort of, you know, Belt and Road Initiative type of stuff that China does investment-wise in many countries around the world. This is, you know, one of those things that was addressed in Venezuela, et cetera. Number two, preemptive trade restrictions on non-US. Nations. Jurisdictional preemption on critical minerals. Rescinding the digital services tax and online news act. So, these kinds of things against US companies. That's more commercial. But the other ones, you know, basically telling Canada, look, we have say over who you do what kinds of trade deals with, whether that's for infrastructure or whether it's via exclusive arrangements to where you export your crude, et cetera. So, this is a really key stuff. And, you know, power-wise, the US most definitely has the upper hand. Now, the tricky bit here is that Mark Carney was elected because of public outrage in Canada at Trump's posturing in his way of, you know, the bullying posturing of the US on these trade relationships. The opposition was very clearly set to win that election. And Trump waited in there like a bull in a China shop in terms of trade policy. Whether justified or not, I'm just. illustrating what happened. And the Canadian public was outraged at this, you know, going against the precedence of the tradition of US-Canadian relationship. So, I agree with Michael Every on this. And I'll put a link to one of his comments on the whole situation that, you know, the US does need security in this new world. It does need to think about Canada because it's effectively the US's northern border with the world. Arctic shipping routes, same thing affecting these, the posturings, the US posturings on Greenland, et cetera. And why, you know, we can't accept, for example, that China is allowed to develop something in Greenland. These are really paramount considerations for how the world operates. And, you know, maybe the US gambit fails. But it's what the US is trying to do. And so, we need to recognize it as such. And how Canada bows under or not will be watched by the rest of the world, as Michael Every points out. Really critical there. And really critical to understand, what this new sort of wave or sanctions round against Iran will mean in terms of the crude oil price, which is fixating markets. And we have, you know, crude is off a little bit today. There is some, you know, you can see anecdotal stories about there's a decent amount of traffic going through the Strait of Hormuz on this so-called Omani route that the US has tried to open up. But at the same time, Saudi is, you know, bending over backwards, doing all kinds of acrobatics to get crude to market when it's. when it's exports through the Bab al-Mandeb Strait, the sort of the pinch point between Yemen and Africa is being threatened by the Houthis. So there's still an awful lot going on, still a cloud over that. Iran will be doing everything it can to disrupt crude oil flows and make a nuisance of itself, as I've put it, to punish, quote unquote, Trump into these midterm elections. So lots at stake. And I think the markets, while they're still trying to march to the beat of the AI drummer, and there's all kinds of news flow on that that I'll be getting to in a moment, the combination of crude oil prices plus often related spikes in global bond yields is something that I think can derail or risks derailing market sentiment. And then, you know, specific to that Treasury buyback announcement last week, as we know, you know, the U.S. is going to be in a lot of trouble. So I think it's going to be a lot of The market is throwing cold water on this in terms of its size, the impact. It seems to be showing a sign of panic. Some saying this is not yield curve control when implicitly, obviously, it is yield curve control or an attempt to do a shot across the bow of yield curve control and financial repression. And yet, Treasury yields rebounded. And so we saw the 10-year, in fact, closing right on those highs again of the cycle, 4.75%, a massive focus area. So if we're, you know, if we're nudging above there very, very slow fashion, there's no volatility, doesn't necessarily have to be that big of a factor. But if we streak through there with some kind of momentum, A, I think the markets will be spooked by that. But B, we should also look for, you know, what is the next round of policy response? And then C, you know, we have the Fed coming up this weekend. I'm wondering if it is too early. I've tried to position this as massively important. It could be massively important, and maybe it should be massively important, this Jackson Hole appearance by Kevin Warsh for the type of signals that he will send, which, looking at the structure of the U.S. national debt, the Fed really has no room to maneuver on the hawkish side, even though Warsh has tried to buy credibility with his posturing on inflation fighting, et cetera. So I will be generally looking for the Fed to come up with excuses for keeping some degree of inappropriately dovish policy with, you know, a set of task force findings. And otherwise, I'm going to be looking for the Fed to come up with a set of task force findings, and otherwise, that would buttress that policy response. In the meantime, it's a conference that's supposedly about stablecoin infrastructure and how the U.S. can take advantage of that for policy and what it means for policy and payments. So we could get some interesting signals on that. And the crypto space is certainly going to be watching closely for the language around that side of this symposium. Bitcoin, it kind of stalled a little bit, but it has been a reasonably tight consolidation. This crypto trade has really been, you know, lit on fire. And in percentage terms, and especially in volatility terms, has far outpaced what is going on in gold, which continues apace to the upside as well. We saw new highs in gold overnight, 46.60 almost at one point. And silver struggling a little bit in relative terms on the charts, held back, I think, a little bit by the copper side of the industrial metal side of silver. But, uh, also certainly on the move. And again, the whole notion is, or the whole, I think, narrative here, and I think it's one that is supported very much so for the long term, tactically have gone too far too fast, I don't know, is this idea that that treasury buyback announcement shows, sort of shows the hand, reminds us of the hand that the treasury and the Fed are dealing with, and that the only route, or the only policy option is financial repression, which means that we need, to own hard assets. All right, let's get a little bit to news flow. Uh, and really not much to, to write home about in terms of the actual market performance. It was brought broadly okay on Friday, up slightly on the averages, a bit more so on the Russell 2000, but a little bit down on the semiconductor index. NVIDIA was down. There was an interesting news item. Oh, then by the way, overnight, Kospi was down quite badly. A lot of that Samsung getting really trashed on its plan to distribute $80 billion of profit, I believe was the number, to shareholders rather than concentrating on buybacks. They're doing it, I guess, via dividends. Market not celebrating that. The Nikkei was also down. But one of the news flow items in the AI space on Friday, pretty stunning stuff. So Broadcom had been talking about a $60 billion, $60 billion chip financing deal, putting together a lot of these private equity and other names to finance this. And a lot of this apparently headed for Anthropic and their infrastructure needed for. Obviously for the AI data centers. That expanding to headlines of $100 billion, unbelievably. And of course, Anthropic needing to show that massive growth because they want to show maximum momentum heading into this IPO, which apparently could be set for as early as this coming month. So this is the buzz of AI town, this Anthropic IPO. Meanwhile, maybe a little bit of a concern here, a little bit of a sour note to the FT's lead article in terms of most, most read today was one titled, "Anthropic's Best AI Model Struggles to Attract Users as Cheaper Tools Thrive." So apparently the corporate customer is not needing this latest model or wanting to pay for it relative to the performance they're getting in other models and maybe from other vendors as well. So maybe a small sign of concern there for that specific story. And certainly with all this financing, we need to see adoption. We need to see the profits appearing somewhere rather than just being the after effect of all of the borrowing and gorging on debt to finance this AI build out. So that's certainly a story to track as well. And then it's earnings week. And the biggest earnings report of all is, of course, Wednesday's NVIDIA report. Obviously very key for the chip space, for the AI space. But plenty of other interesting news for the AI space as well. But plenty of other interesting names and themes to pivot on. Software as a service is a big one this week, as we highlighted late last week. So already up tomorrow, we've got Intuit. I would point that one out as a key one. Quite a recovery we've seen there. Salesforce is also up on Wednesday in addition to NVIDIA. And then on Thursday, we have Workday. So a trio of interesting software as a service names. We've seen a dramatic recovery in the software as a service trade, especially in relative performance terms. with the disrupted versus the disruptors relative performance. Disruptors being, of course, AI hardware. So that theme, has it sort of have we sort of squared and mean reverted? Or is there is there more to dig out of that theme? I think it'll be a question that is answered this week. And then as well, CrowdStrike, a huge cybersecurity name, they are reporting on Wednesday as well. And then very much a macro focus all throughout here with your treasury yields where they are, but it's not just treasury yields, it's global bond yields in general, the Eurozone yields are no exception. We did, I may have neglected, I probably did neglect to mention it last week. I mean, it's not a big move at all, in yield terms, but the German Bund, the 10 year benchmark, did hit a new high since 2011 or 2012. But basically, since the Eurozone sovereign debt crisis, a new nominal high in German yields, 3.25 plus percent, that area looks critical here, for whether this thing continues higher or not. So I'm going to go ahead for whether this thing continues higher, of course, it will correlate with treasury yields, etc, to some degree. And perhaps, you know, the Eurozone twist is always going to be the sovereign yield spreads across Europe. And France is the problem child of Europe in terms of its debt dynamics. And where we need to focus the most because it's supposedly core, it's unacceptable to have a sovereign debt crisis in France, for example, relative to the whole peripheral argument during the prior round of crisis in 2012. And so I think it's going to be a big issue. And I think it's going to be a big issue. So I think it's going to be a big issue. And I think it's going to be a big issue.