MOVE more important than VIX

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 Monday, 21st of September, 2026, and we have markets in a solid mood to kick off the week. We have oil prices down. They ended kind of on a soft note on Friday and have come down quite a bit more here today to start the week. But the sour note, if you will, we're talking about soft notes and sour notes for some reason today, was the bond market. And we saw U.S. Treasury yields at the front of the curve closing at highs for the cycle, 4.74% on the two-year. The 10-year is still. It was still capped. It was higher, but it was still capped at that 5% area. So as long as that's sort of tamed and not ripping to new highs, maybe you could argue that the market can weather this. And we did see this extreme divergences within the internals of the U.S. equity market on Friday where a lot of the momentum AI names were doing well, the usual suspects like SanDisk, I think a couple of the optical interconnected stocks, the leaders on the day. But the overall median stock was actually down. So the S&P 500. The S&P 500 equal way, it was down around half a percent, as were Russell or small caps, I should say, the Russell 2000 index down a similar amount. And that kind of makes sense when you look at this big boost in yields. But again, it was the market cap heavies that kept the overall result positive on the day. And if you just look at the NASDAQ 100 index, it still looks in technically okay shape. It never continued lower. It never sort of violated the key. The port and now is rallying back higher. So there's still some overhead resistance to clear before we're arguing that it is going to make a go for it through year end, for example. And the S&P 500, similarly, it's sort of come out of this pivot zone, which it showed recent dangers of dropping below. But it needs to fire on all cylinders to get the momentum back running to the upside if it's going to do so. And we have this combination of yields, I think, justifiably making the market nervous in places. And if you're going to. If you're going to tell me that the 10-year is going to continue to pull higher above that 5% level, then I think we're heading for some more market turbulence here. Whereas if that issue sort of goes away and we get crude oil prices, let's call it $10 a barrel lower somehow, I don't know how that's going to happen. Then maybe there's room if passive flows continue into the market and there's no distinct nefarious economic news afoot for this rally to resume. We're still in the. It's a tough period seasonally, though, here in September and into October. So I'm a bit cautious and very cautious, again, if yields continue higher. And speaking of the yields, also have to keep an eye on Europe here. We saw the Germany-France spread heading to 105 basis points. That's the 10-year, by the way, sovereign yield spread. That's the highest by a long shot since the sovereign debt crisis back in 2010 to 2012. So the previous range high was around 88 basis points. So here we are. Good, solid 17 basis points above that level and moving several basis points just on Friday alone. Again, this thing needs to sort of continue to stretch wider on a more sort of persistent basis. But still, this is definitely a note of concern with French yields getting close to where the U.S. yields are for 10 years. Actually, over 4.5% in the case of the French 10-year yields, 120% debt to GDP. Similar dynamics there, but with a less generous funding. Perhaps if they don't show some signs of discipline than you have in the case of the U.S. with the global reserve currency, etc. So keep an eye out there. Certainly, the mood in Europe was more downbeat on Friday, down well over a percent in the case of the stocks 50. In the stock 600, the broader one was still down over a percent. But as mentioned, we have a strong start to the week here with the futures up quite heavy. I think it was 300 points I saw the NASDAQ 100 futures were up, enjoying the tailwind. And of yields coming back in quite sharply, in fact, and the crude oil price dropping. We'll also post the multiple witching on Friday. But let's see. It's just an interesting positive start to the week. Certainly, I think there are risks afoot with oil prices and product prices. $6.50 was the price on diesel in the U.S. And, of course, it's much higher than that elsewhere. There's even talk about, there's apparently one of the senators, Iowa Senator, Mr. 93-year-old, Chuck Grassley, senator since 1981, by the way, talking about and encouraging Trump to do an embargo on U.S. diesel exports. I will put a link to a Wall Street Journal article from last week. I think it was a headline I noted already last week. But there's a little bit more noise on this front. And, I mean, just we can only imagine where prices might go for the rest of the world if U.S., a major exporter of refined products, around 1.6 million barrels a day of diesel. Or at least 1.6 million barrels a day of diesel. 1.6 million barrels a day of diesel is most of that diesel, is my understanding. This tightens the market much more in the rest of the world. And, in fact, there was a lot of news coverage last week of the China-Shanghai futures exchange. The oil trading there as high as something like $138 per barrel on the futures when we're looking at a price close to $100 per barrel. Elsewhere, China seems to be back on the bit a bit for oil cargos. There was this remarkable, of course, slowdown in Chinese oil demand. As the war in Iran broke out, they're trying to maybe flex their ability to be self-sustaining with such a move. But maybe they've reached the end of their willingness to live off of their strategic supplies. In any case, there are a lot of dynamics here. The supply situation just continues to get more and more and more and more stretched. So there has to be some good news. One of those good news items is that there's a lot more traffic going through Hormuz than maybe we can get sort of fully confirmed. But then again, a lot of this is apparently crude oil. And more than the refined products, or at least the refined products portion of the mix is lower than it needs to be. And overall, shipments are an issue. And there's this whole Houthi issue, which is huge for Saudi. A couple of perspectives here. They're making military advances, these so-called Houthi rebels. Saudi doesn't seem to have a lot of answers for this at the moment. And they're sort of reaching out to the U.S. for help. There's some headlines about the U.S. will be talking with the Houthis. But it doesn't seem there's a signal of military involvement there. And that would be a concern, of course, if there's further mayhem akin to these reductions of the flows going through the east-west pipeline in Saudi and or inability to get the crude out through the Bab al-Mandeb Strait, which is the entrance to the Red Sea from the Indian Ocean. So we need to continue to monitor that. And I just was doing a very miniature deep dive in the background of Yemen and the Houthis and so on. It just crossed my mind. Yemen is quite a populous country, I was thinking. What is the relative population? Of course, we know Saudi Arabia is vastly more wealthy with its oil production, et cetera. And that's not always the key calculation. But just for perspective, Yemen has a population of 43 million people, a very populous country, very poor. There's a lot of hunger there, something like 30 percent reporting that they're not getting as much food as they would like on a daily basis. It's a terrible humanitarian situation. A lot of that because of, you know, they're being sanctioned from left, right and center for their hostility to Saudi Arabia. Saudi from abroad. But the Saudi population, so 43 million for Yemen, 35 million for Saudi Arabia. That might surprise a lot of people. Yeah, so there's that issue as one of the key ones. Besides, there's all these, of course, the disruption of Russian, especially refined supplies because of the attacks on energy infrastructure from Ukraine. And Ukraine launched its largest drone strike to date here over the weekend, something like 1,500 drones. And they're even managing to mobilize. A new ballistic missile for the first time. So I think those are harder to defend against than these drones that could make these types of attacks even more devastating if they continue. And then there's also talk of Russian escalation after this, the formality, I guess I should say, of this election. So that's one risk we have if Putin decides to do this general mobilization or call up of troops rather than, you know, basically the voluntary setup. That has mostly been the case to date. Let's see, what else do we have on the geopolitical front? A couple things. There's German, the elections in this former East German area. Well, it's still East German, but former part of the East Germany, the East German country. Mecklenburg-Vorpommern, sort of the northeast of the country, northeast of Berlin. Only about 1 point, is it 1.2, 1.5, something like that percent of the German population. The CDU only managed 4.9% of the vote. There in these regional elections, meaning that they did not clear the 5% level, which is what you need for – that's sort of the threshold for representation in parliament there. So they have no representation in parliament in Mecklenburg-Vorpommern where the social democrats are quite strong. And, of course, it was the Alternative für Deutschland, the AFD, that got 38.2% of the vote, a very significant advance relative to the prior results. So further signs, maths is getting closer. Close to being under existential pressure, he's vowing to continue and that he's going to continue with his – with his reform programs and with his current plans, but, uh, it's looking, looking very embattled, I must say. And I, I'm wondering if the political situation will stay, uh, stable there or whether some kind of, uh, uh, election needs to be called ahead of time, which is very unusual, uh, in the case of Germany. And then we also had Michael Every pointing this out on, um, on X, this sort of, you know, popcorn, break out the popcorn moment of this attempt by the so-called middle powers to put together some kind of coherent program, sort of leaning more on a multilateral world with, um, uh, but also with the involvement of the UN, uh, et cetera. And now there's, uh, uh, you know, have a Canada and the EU trying to get a little bit cozier with one another, uh, Brazil's, uh, Canada in the coming presidential election, very coming up very soon, by the way, uh, Lulu or Lula, I should say, uh, is, uh, out with, uh, you know, there's a sort of a common FT article on talking about this whole middle power idea. I think Kenya, it was the other country and every making fun of the sort of acronyms that are, don't really work of putting together something like, you know, the equivalent of bricks or whatever. And there's just nothing that looks good with the combination of the letters of these countries, uh, nor any coherence relative to where Michael Every at least thinks the sort of, um, direction is going with these, uh, with these great powers and the need to sort of pick your side. So super interesting, just that whole framework of, uh, are we in the era of, you know, a bifurcated world or sort of maybe four or five, uh, you know, a bifurcated world or sort of, you know, a bifurcated world, major players, EU, India, China, US, and you got to pick your sides. And these, these areas are going to become increasingly self-reliant or, or is there something that resembles some sort of globalized system where these middle so-called middle powers, uh, can operate and have relevance. Very interesting to see how all of this moves forward. And I suspect we're within a few years of finding out the answers, uh, to that and a few years or less, uh, even. And on that note as well, this week's big focus geopolitically is the Trump she summit. We all know that if she is going to be making a personal appearance in Washington, DC at the white house, et cetera, that a heck of a lot has been agreed in a very, uh, specifically agreed and signed off on beforehand. And the, the noise that are being noises that are being made right now are very, very friendly on, you know, we're trying to work together on AI on, on terms of trade, uh, and investment. Uh, and especially there's a little concerning note here, and I've seen some very dark references, on X that I won't bother to pass along. So I don't like to think about it, but, uh, uh, there's, there are some references in the articles to, you know, agreements on biological weapons. Let's hope agree not to go there. Um, but you know, we can all be afraid that there are significant resources being put into at least investigating biological weapons with AI, et cetera. So I'm guessing we're not about to see a massive us, a China, uh, escalation in terms of, uh, you know, new tariff threats, et cetera, but some kind of agreement to keep. Things at least, uh, stable, but who knows, uh, maybe there could be an agreement that looks good on paper and then they continue to sort of turn the screws here and there on rare earths in the case of, uh, China. And then, uh, you know, in the case of the U S continuing to establish dominance over the Western hemisphere, uh, you know, the likes of it's, uh, posturing against Venezuela, et cetera. And, uh, and maybe even trying to control more of the global energy infrastructure, who knows, but I'm not expecting this to be a significant market event this week. Although of course it has the potential to be one. Turn out in a friendly fashion. Yeah. And then I think, uh, you know, rounding out, I got a couple of single stock things. I think I'll save those a little bit towards the end here. Just want to mention the cross market things going on gold. You know, it's, it's still hanging in there reasonably impressively given where we've gone on a bond yields globally with this big fresh spike, but, um, yeah, it's, it's still getting a little bit stuck here. It needs to, it needs to clear those, those local highs and get back towards a 4,500 plus to become, uh, relevant, just continuing to think it's, it's, it's showing relatively positive performance given the, the big, uh, a ramp in, in, uh, global bond yields. The one that's kind of interesting to me, I don't have a good explainer is the whole crypto situation. Is this an expression of doubt on the stability of fiat currencies? Uh, and, and of course the safety of the treasury market, is it just noise? I don't know, but we are banging on the key resistance in Bitcoin around 82,000. Uh, so keep an, keep an eye on that one as an indicator for what's going on crypto, which tends to move in these big, in these big swings and then just gets kind of stuck into a range. And kind of interestingly as well, Ethereum is actually broken out price-wise of its recent peak. So a bit of, a bit of action there in crypto without good explainers, uh, is the explainer of this whole sovereign debt stability angle. I don't know just yet, but let's, let's have a look and it could be, you know, maybe a little bit is linked to the situation in Japan. So if I go over to FX, we did see the situation in Japan. So if I go over to FX, we did see that big squeeze and Dalian on Friday getting into that really key resistance area. I was mentioning 158 40 was sort of the ultimate level or area, maybe a little bit higher than that. It reached all the way up to 158 and slightly above. And then we had a rate check so-called from the bank of Japan where they're inquiring about the exchange rate levels, apparently with key banks. Uh, this, this, you know, caused a big swoon in Dalian, at least intraday. So we went from 156 before, uh, the, um, uh, the bank of Japan meeting to 158 after the bank of Japan meeting, as it was seen as disappointing, as I discussed in Friday's podcast. Uh, and then this, this sort of, uh, you know, rate check or whatever, send it back below 157. And now we're trading back around 157 early today. And we've come back up above it. This is a difficult time for this to be happening for Japan as well, because they're on a three day holiday through a Wednesday this week. So keep an eye on that. Uh, 158, 158 50 zone. Now As sort of the, the last gasp of resistance. Otherwise we're going to have the, um, the whole yen situation in trouble and you'll need to see a official response if they do want to keep it capped, at least, uh, Dalian that is. And, you know, testing above 160 is just something I don't want to see again, because that gets the whole, you know, notion of the not in control of things back, uh, back, uh, out there as, as an issue. So, uh, you know, those that got positioned clearly for Dalian downside recently have been pretty thoroughly squeezed out of the, of their positions here, but there could be some residual, uh, discomfort if it goes above 158 50. I'm keeping my eye on that area. Uh, yeah. So, and then a couple of single stock news, I was just for perspective on the refined, um, refined products in the energy space, a company like Valero has huge us refining stock. They're sort of a pure play on refining. So they don't have all the other upstream stuff. It's just the, uh, the, uh, you know, refining of products and selling them to market. Uh, hit a price of 413 on Friday. It started the year at one around one 62. So for, for perspective there, those are AI stock like gains. Uh, and, uh, you know, obviously there's a vulnerability there if anything normalizes and refined products, but just an incredible move by that company. And then we have Volkswagen, a really ugly moment for this company with its, um, you know, announcing of a big cost for a write-down related to Porsche. Porsche is really struggling, uh, as a car company and their China business, which continues to be an issue. They were down. I can't remember how much, but a lot as well. They were booted out of the stocks, 50 index. So, you know, extra humiliation being piled on there. By the way, Nokia, uh, replaced them in the index, uh, as a company that's getting a little bit of an AI angle now in its business. Uh, and then we had Novo down very embarrassing moment. They had their so-called, what is it called? Capital markets day where they're talking about, yeah, we need to up our production. We need to serve 10 times more people with our obesity treatments. Uh, we need to have five, uh, you know, new phase three, uh, trial candidates and within diabetes and obesity. And, uh, uh, you know, the market just sent the shares very steeply lower. They were down more than 6% just before I came in here to record the podcast and just a very ugly look for this company. They really need to diversify away from this, uh, you know, diabetes area, which has been their bread and butter slash diabetes slash for so long. Of course, they are going to be a massive presence in that space, but they they've been showing a hard time competing with the, uh, the Eli lilies of the world. And there are other drug candidates out there that may be just as effective as well. So this company is really having a hard time getting its, uh, getting itself back onto some kind of growth story. And, um, and governance seems to be an issue there. All right. That takes me to the links, uh, that I'll put in today's podcast episode description. Uh, there's one, I just wanted to mention this as a, uh, there was a headline and I gave this headline a lot of interest in as a big sign of something. And this is the Saudi, the announcement that Saudi will be, uh, uh, taking itself off this so-called in bridge platform, uh, some kind of currency platform for settling trades that is, is run by China is supposed to be a, you know, a significant, um, a way for the, the, for China to establish a major settlement system that is outside the U S dollar system and outside the Swiss. But the, this, this headline looks a little bit over, over egged or whatever you call it relative to its actual import. So I'll put a couple of links in there. There's, there's loop grown that reminds how many transactions continue to take place or the growing number of transactions that are taking place in, uh, C and Y or C and H, uh, whichever it is getting close to a trillion dollars, which sounds like a lot, but then you think about, uh, if chat GPT is right, that, um, that the annual, a number of U.S. dollar transactions actions is something like $113 trillion. But it's gone up five times in the space of six or seven years, the CNY settlements, that is. So it doesn't take that many years for that kind of growth to mean that you have a significant amount of trade going on outside the US dollar system. And a couple of links, by the way, to other, if you really want to go in depth, you can subscribe to Isabella Kaminska's Substack, the, I'm forgetting what it's called. But it's, she's a great voice on these types of issues and a qualified one to go into the details. Don't read too much into it. It is the long story short here. Then there was a Wall Street Journal video, by the way, on North Korea's secret US workforce. Just incredible how they managed to sort of leverage North Korea. Citizens to go in and cheat their way to do all kinds of revenues by activities actually in the US. And finally, the Wall Street Journal article on that fuel export ban. If this happens, I think this is a pretty spooky moment for certainly global stock markets outside of the US if they go through such a thing, which would also have geopolitical and diplomatic implications if they did such a thing. So super interesting to see if they're desperate enough, they being the Trump administration, is desperate enough ahead of the midterms to take such a dramatic action and what the impact would be across markets if they did so. All right. Lots to look at this week. Super interesting. We talked about it this morning in our internal meeting. Is it the VIX that's in control or is the MOVE, MOVE being the bond market volatility index, which has been going up quite a bit while the VIX has been going down? To me, the MOVE is the mover that we need to note the most and is the most important if it can be done. So thank you. Thank you so much for joining us. We'll see you next time. Thank you.