Markets pause for breath after yield run-up.

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's Thursday, 3rd of September, 2026, and the market's getting a little bit of relief on the bond yield front. We saw yields peaking out and rolling over a bit on Wednesday. Not massively so, but just maybe the relief of pressure helping risk sentiment to stabilize a bit. And we've got an ADP number, by the way, ADP payrolls change number that was relatively benign. It was slightly lower than expected, only 38K, but it's not bad enough to spark fears, I guess, of incoming weeks. And then overnight, the Nikkei was actually slightly down, and Europe is a little bit more downbeat. I think some good reasons for that there with energy prices. And also, Europe has been a bit slow on sort of picking up the negative vibe that was in evidence elsewhere. By the way, the Nikkei down because of big moves in the currency market, and I'll get to that in the macro and FX section in a bit here. We saw we have this oil situation, saw a small correction, went down, but it's still quite elevated. Relative to the recent range, the oil price, a lot of back and forth, Trump trying to be dismissive of as is his want for or on the case on the situation in the Hormuz Strait, saying that there's plenty of Hormuz traffic going through. I saw at least one headline debating that. It's very difficult to monitor these things, especially when ships in some cases are turning off transponders, what have you. But there's that. And clearly, it seems, as I think one observer put it quite rightly, that. Some of these expressions of how things are going or the attitude towards the worst seem to be having some fading impact. So a bit of diminished returns on the impact of Trump saying this versus that. And I think a lot of that is down to the actual supply situation looking pretty dire, especially in refined products, as we've been talking about. $200 diesel per barrel, for example, 100% more than the basic crude oil price. What else do we have? We have plenty of single stock action to discuss. So we did have Broadcom. They were out. And the reaction there was slightly negative, minus 1.7%. They're trying to talk up their business. But it's worth noting that this stock trades right around and now with this reaction just below the 200-day moving average where it's been hovering for a while. It's some 25% down from its all-time high. And that equates to around $500 billion in market cap. So there's a lot of sluggishness. And this whole hardware namespace for AI, if you look across the space here. So this has kind of continued in the wake of the situational awareness collapse, the big reversal in the memory names, et cetera, on these leveraged ETF debacle, et cetera. So there's still the hangover, if you will, it feels like, in a lot of the hardware space. But there are single companies that are managing quite well. They're managing quite well. Dell was one of them with the spectacular sales and growth and sales of AI Server. It finished yesterday up 15.8% after a pretty chunky positive reaction to its earnings report. On the flip side, Palo Alto ended the day down over 9%. And Palantir, I didn't see the story there, but I just noticed it was one of the bigger losers on the S&P 500, was down 5.8% yesterday. In the positive column, Snowflake up. 24% or just under that. Really spectacular. The growth in their business, the way they were massaging the Outlook, et cetera, and the uptake of this AI system. And it looks like they're sitting really nicely here in what they're doing, which the short sort of description of what they do in a Bloomberg article is something like they sort of help companies to organize and analyze their data in the cloud. So apparently you can buy sort of a storage. You can buy a storage solution with Snowflake, and that's relatively inexpensive. So you can put all your data up with Snowflake on the cloud, and Snowflake uses all kinds of different, you know, the major cloud providers. I'm not sure to what degree they're dealing with the infrastructure itself. But then they charge you for the amount of compute you do in the cloud on your data. So you can have an uneven sort of compute load depending on when you get inspired to start looking around at your data and doing AI runs on it. And they have an AI assistant coding. They have a coding tool, which is getting a lot of attention as well. And I suspect what's driving, and this is totally my random speculation for what it's worth, is it makes a lot of sense. I've seen it in companies at close hand. They, you know, everybody has a lot of data. And they're saying, hmm, let's run some AI inspections of all this data, see what we can come up with. And I'm sure there's just tons of that kind of activity. So those AI-related workloads are clearly driving some of Snowflake's. Pretty tremendous move. Believe it or not, I think it's not still, it's still not quite back to the highs it reached back in 2021 when it was really a bubble stock at the time. There was a tremendous correction off of those highs. But getting close now with the actual growth that the company has succeeded in achieving, getting back closer to at least those late 2021 highs. Yeah, and then another interesting one was Reddit. I went down a miniature rabbit hole that I had to extract myself from so I could get in here. I recorded the podcast. It really is super interesting, this whole friction for a company like Reddit, which, of course, hosts these discussion groups or whatever you want to call them. You know, you start a topic and people can write in on that topic and there's all manner of response from the community. Super popular also among the younger generation. So the deal was that they at one point sold sort of very integrated access to Google. I think it was $60 million a year to their data. And, you know, obviously other companies can also just scrape that data. And there's been some back and forth with Reddit making charges and legal claims against, I believe it was Perplexity and Anthropic with that scraping and how much and how invasive that scraping can be. And there's even some friction with Google who's paying up for their data because they're saying, as far as I understand here, that Google is sort of increasingly providing, digesting the data and providing its own answers. Via its AI mode, you know, when you're in the Google or in the Chrome browser, for example, and not taking you sort of to the source. So, you know, there could be friction around the next round of negotiations on how much, how invasive the scraping can be, how much you can present the data with and crediting where it came from, etc. So quite interesting. Reddit is still way below its highs, but it had a very big pop yesterday. I couldn't really trace it distinctly to a specific news story. But it's one of those, it's probably one of those companies that's going to do really well or get really crushed by this whole AI, you know, these issues that I just ran down there. And then here's a random story. And I didn't double check this myself because it came from an ex-follower with multiple hundreds of thousands of followers. So I just took it at face value. But the claim was in this ex-post that the Caterpillar CEO has just sold 40% of his Caterpillar holding. So that's a chunky bit of a stock relative to the amount he holds. And, you know, the idea could be, the insinuation could be from this that, you know, Caterpillar has benefited massively from this big brush and data center construction. And, you know, is that somewhere at the top or early in the chain of the spending chain, if you will, supply chain going into constructing data centers? Just a little random item there. Okay. We got a decent. I'm out of a noise and an action market action across the macro space. As mentioned, yen moving sharply higher. There was no real proximate cause or catalyst that I could see does clearly look like it's intervention, especially the initial move where we saw it pounding down where we were just about 159.50. And it pounded all the way down to the low 158s and then bounced very aggressively all the way back to 159. And then it's been moving lower still and a bit more sort of grinding fashion in 80s. Asian hours overnight down well through 157 and even if I recall 156.35 or something like that. And then it's bounced back a little bit. So really curious to what degree this is semi-organic because of the recent much more hawkish sounding Bank of Japan and repricing of the front end of the Japanese yield curve and how much of this is proper intervention, which I suspect it is to some degree being thrown into the market by the Ministry of Finance. And the key will be in the action, the price action that comes wherever we bottom out here on this yen and yen dollar and yen cross move. And it really is pretty equal across the space because there's not really a dollar signal here. Your dollar is rebounded very, very slightly. weight of that intervention being mostly in dollar yen, but euro yen moving almost the same amount. Sterling yen actually moving quite a bit more. We saw a little bit of a pop in euro sterling above quite a persistent range resistance, zero spot 85.80. I didn't see really, it's hard to do the attribution here. I think maybe a little bit just the general risk off vibe concerns around fiscal dynamics with yields where they are because the UK is vulnerable on that account, being reliant on the kindness of strangers, if you will, and financing its twin deficits. But it didn't pop a lot above that level, but it did try above zero spot 86 did euro sterling. But back to sterling yen being a bigger mover there and the yen moving definitely across the board. New developments in Japan. We do have this guy Takata. He's on the bank of Japan. He's a known hawk. He's running around saying all manner of hawkish things. He's not the signal. The signal is in what the front end of the yield curve in Japan is actually doing, which is rising quite aggressively. And we're now fully, fully priced for this September 18th bank of Japan hike. So they're going to have to deliver there. It would seem to, you know, to avoid any kind of impact back into the currency. And then it'll be interesting to see what kind of guidance they provide for the meetings after that. Worth noting as well, and we saw a tremendous yield curve flattening, a bull flattening, in fact, overnight in Japan, because there were a lot of people saying, oh, it's going to be tough. And then we saw a 30-year JGB auction that went very well, saw strong demand. And we saw the 30-year yield, which just the day before had tested that all-time high just short of 4.22% into the day, I think a little bit back lower. And then it was crushed another nine plus basis points overnight on this auction result. So it looks like at these yield levels with the bank of Japan becoming more serious, maybe some of those domestic surpluses being recycled back into the long end of the curve. And savings abroad, who knows, by Japanese savers being recycled back into the long end of the curve. An interesting vote of confidence, it would seem, at first blush at least, in the JGB market. And that supports, I think, the general case here for the Japanese yen with or without the intervention. So now we have more, of course, U.S. data coming in. As mentioned, the ADP was slightly soft, but I mean, we're talking teensy tiny numbers relative to the size of the U.S. labor market, whether it's plus 38K or plus 50K. So I think it's going to be a little bit less than 50K. This is, you know, this is just such a tiny marginal amount. If it had been minus 38K, I think the market certainly would have sat up and took notice. Today we have the ISM services survey for August. Most noteworthy, because the last time around it looked solid at the top of the or on the headline with a 54.1. Supposedly the baseline expectation for today's release as well, that 54.1. But the employment subindex dropped all the way down below 48, suggesting actual contraction. Hiring intentions and on the employment side. So I would focus, of course, on all the numbers, but that employment number looked like a bit of an outlier the last time around. And then, obviously, we have the Friday, we have the jobs report. The unemployment rate is important as, not as important, but it can be an element that, if it surprises, tilts those FOMC odds going into September. On top of the nonfarm payrolls, the survey that is always supposed to be the most influential, and I've always hated the most, because it's not going to be the most influential because in the modern era of massive revisions over time. But it is what it is, and we just wait and see what it delivers tomorrow. Have a couple of interesting, I think they are, and maybe you'll agree, and you can find them in the podcast episode description if you care to follow up on these. I got a hold of a link to this guy, Gavin Baker. I don't even know who the guy is, but he's a very Silicon Valley type that is hyper-profit. He's a very hyper-profit type that is hyper-profit. Pro-AI. And it was an interview on this A, what's it called? I can't remember. AZ-16, or A-16Z, I think is the, or A-16Z, if you're American, the podcast with some host, also a Silicon Valley type. And it is so incredibly over-the-top positive on everything AI. These people obviously know technically what they're talking about, but my goodness, they are definitely drinking the Kool-Aid on everything. They're drinking everything from Elon Musk and everybody else in Silicon Valley. Space-based data centers. What are people complaining about with these data centers being built in their communities? I mean, these are fantastic, almost environmentally friendly, non-water-consuming data centers. There is this mention of XAI's new GrokBot as being incredibly, and this is interesting, this is something I have to pursue myself, GrokBot being so much better than basically agentic AI that they're launching from XAI relative to Claude, Anthropix, Claude, whatever the agentic AI one is, because it does things more efficiently. And that prompted me, I was just, it's almost nauseating listening to these guys. They're so incredibly positive. That's my personal reaction to it. And I put this out to a discussion group and somebody came back with this very recently. They released a book called Nerd Reich, as in Third Reich, but Nerd Reich, that talks about, it's a highly charged, highly partisan, clearly the guy has an agenda, and you can believe in that agenda, and he backs it up. The whole book, of course, tries to back it up. But arguing, no surprise from the title, that we're facing the risk of this tech oligarchy of billionaires that have an agenda that undermines democracy and supports democracy. So basically, an authoritarian or fascist government, because of their control of technology and how they can control, I think, what we've seen in many ways playing out as well, they can control, or these operators can control basically and undermine how we agree on what reality is politically or on any kind of information, whether it's vaccines, whether it's the pandemic, whether it's anything. And I think worth consideration for anybody, and it's really difficult to talk about these things, because this gets into such a highly charged, politically highly charged area. But it does apparently do a decent job, according to reviewers, of sort of breaking down the intellectual genealogy of people like Peter Thiel, where he came from, the whole ideology of Peter Thiel and his ilk, to what degree this is a massive cabal that's all working in sort of conspiracy to overthrow everything, and to what degree it's kind of a conspiracy to overthrow everything. So I think that's kind of a loose, maybe a looser set of people that are moving in that general direction without necessarily coordinating things. I think that's maybe a bit more up for debate than what it sounds like he is trying to conclude here. But I listened to the beginning of it. It sounds interesting, very highly charged, making very clear charges on what it believes in. But curious to get into the weeds on the parts about the background of Peter Thiel and Curtis Yarvin, all right. So I think that's kind of a loose, maybe a loose set of this whole Silicon Valley group of people. And I suspect that people like this Gavin Baker that are in this other interview are very much, you know, in agreement with a lot of the principles without, of course, being wanting to be characterized in the way that this author, what's his name, Gil Duran, would characterize them. So there's that, those two links there. There is a good ex-post I saw that's a complete sort of counterpoint to what I was talking about yesterday with the discussion of China needing to revalue its currency to the upside and then China needing to, you know, rebalance its economy, et cetera. As Michael McNair writes a long response to, I think it was a Santiago Fund point about China's debt where, you know, those that are pooh-poohing the notion that China has any problem with debt because, well, it's quote, unquote, internally held. Well, being internally held does have its consequences as Santiago, capital points out. And Michael McNair brings some more thorough thoughts on that as well, that, you know, where that debt or how that debt gets sort of written down and absorbed by who is a key question that have done the slow way, the Japanese way, can be very painful and tough over many, many years versus if it's done in a more rapid fashion. Anyway, I'm doing a poor job of describing this. Have a look at the link if you're interested. And then I came across this one. I'm not even sure I'm going to listen to this myself, but it's an incredibly deep dive on what the guy himself, it's called The Money Printer on YouTube, says was the quote, real Jackson Hole or what really happened at Jackson Hole, unquote. And it's more completely dropped. It does not cover at all the whole September rate hike or not and Warsh's bizarre ramblings at Jackson Hole, but more tries to digest all of the sort of academic papers and presentations that were made on this whole actual subject of Jackson Hole, which was, let's see, what was the title? Financial Innovation, Implications for Payments and Policy. That was the title of the symposium. And I just did an AI search. And I think this really gets into the weeds on all these things. And I'm sure this has really profound consequences for the longer term. But I'm just putting it out there as a reminder to follow up on that if you're interested. uh there's a lot of skepticism actually on stable coins apparently and um at least among officials. You'll see a very different view among the commentary at whether it's Brent Johnson of Centagro Capital, Michael Every. So for what it's worth, there's some very extreme different views on this. And then there's this whole bit around tokenized deposits and the implications in this real-time settlement realities, which creates all kinds of mayhem for liquidity potentially. It means you can go almost instantaneously into a seize up in the system because actually some of our slightly slower ways of settling things can sort of slow down the gears of a financial crisis as it's happening. So just if you want to get into the weeds, you can follow that link and listen to the money printer talking about all of these subjects. All right. It's interesting, a little pause. We pressed a pause button. I should say we pressed on the whole rising global yields and risk off move. Ironically, as I asked if we were entering the sort of. Vortex or event horizon of a volatility event, I don't think we have an answer to that question yet. So a little bit of a pause button here. I'm still concerned, especially if global yields head back higher after some sort of consolidation here. Super interesting to see the. Well, ISM services, not so much today, but the jobs report tomorrow, and even more so likely to see what the inflation report from the BLS, the CPI official data release next Friday delivers. So a bit of a pause. We'll wait for that. In the meantime, stay careful out there, and we'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, serious, trading worldwide.