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 Friday, 6th of November, 2026, and quite a day to remember to say the least. On the 5th of November, yesterday, Thursday, a historic day really for markets, seemingly a delayed reaction to the midterm election results after a curious prior day, which of course we covered and talked about how we saw this remarkable bifurcation in the market, most sectors having a good day and most sectors in fact having a stellar day on Wednesday, led by all kinds of things, consumer staples, random stocks out there, and then still seeing weakness in the tech space and especially the AI space. And that was sort of what characterized the open yesterday. I was at one point, I was looking at my colleagues and said, what if I told you that most S&P 500 stocks were up on the day? And already then there was some pretty solid carnage going on once again. The vibe very much changed and we shifted very quickly and early on in the cash session yesterday to a broad-based sell-off. So that was the more interesting point there. Full across the board, the leverage, of course, with some nuances and what fell the most, which still was the AI trade, hardware names, the likes of, I think SanDisk was the number one decliner on the S&P 500, down 22.2% on top of its massive existing declines. More importantly for overall market cap and the bloodletting in people's portfolios, NVIDIA down over 9%. And we're talking about getting close to a $500 billion, you know, one stock losing that much. On a single day akin to that recent Alphabet drop. AMD down 17%. That's just pulling out a few, all the usual stuff, the Lumentums, the hard disk makers, other chip makers, chip equipment makers down heavily on the day. In fact, the SOX index was down 12.25% on the day. That's a 40 stock index. And that is just the average, I assume it's market cap weighted. But in any case, heavily, heavily down on the day. The broader market, less so, obviously. NASDAQ was down. NASDAQ 100, that is buying 6.4%. The S&P 500 overall down over 4.3%. Important to point out on the S&P 500, by the way, the 200-day moving average is suddenly coming into view here. 75.23 is where that is in the cash index. That's some 30 points below where we got yesterday. So we were talking well under half a percent to the 200-day moving average on really the most important benchmark there. S&P 500 equal weight. And here's, you know, we're the, the broad selling is, is obviously an evidence minus 2.9. Russell 2000 minus four and a half almost. And then overnight we get Asia also spooked down 6%, both the Nikkei and the Kospi. And the Nikkei crossed below its 200-day moving average with a bit more momentum. I think it had maybe marginally crossed the prior day, but that was a massive follow-through. Russell 2000 sliced through its 200-day moving average intraday yesterday. And the NASDAQ 100 really followed through. And then we got Asia also spooked down 6%. And then the Nikkei crossed below its 200-day moving average intraday yesterday. And the Nikkei crossed below its 200-day moving average intraday as well. So let's try to, so where does that put us in perspective for the year? I think it was 4 point something percent. The NASDAQ 100 is still up for the year, but that is awfully far below the highs for the year, which came in 15% higher than where we are currently. So we've seen a 15% drawdown, more than a correction, not quite a bear market in the NASDAQ 100. That broad AI trade, however, is down 34.5% from its June, so you've been in a massive bear market there after what was, of course, a massive drop. And we're trading right at the 2026 lows in that broad AI index. That's some Goldman Sachs index. It was down 10% yesterday. Of course, the S&P 500, way less. It was only yesterday we were starting to talk about a reasonable, even decline at all. So it was 6.5% or less than 6.5% down from the top in the S&P 500. And the S&P 500 equal weight, as mentioned yesterday, had Wednesday, posted a new all-time high, but yesterday's action more than erasing that. So that was kind of an ugly rejection of that speed burst the prior day. What is driving this? Actually, let's talk a couple levels, and I'll talk about the drivers and the spin on what's going on here, or my stab at what is going on here. So we had the NASDAQ 100 hitting a low. This is the cash levels, by the way. 26.606 was the low yesterday. Importantly, crossing below that July low of 27.175, although right where the futures are now would indicate an opening right around that level. So maybe that's a psychological one there, a key one there. If you go further down, you get to the next key level, which really isn't that far away now. It's 26.600-ish was the low yesterday, and this is 26.165. That was the high of the rally off of the March low this year, and then take a 61.8% retracement. It's near that same level, slightly lower, so 26,100-ish there. So I would say the sort of almost semi-existential support here is arguably this 26,000 to 26,200-ish range if we're going to continue with the sell-off. Again, the futures are bouncing like crazy. We're up 400 points, but obviously that's only about a quarter of what we lost in all yesterday. So that bounce would have to extend to suggest that this was merely some kind of route that was panic selling that is reversing. I'm far from ready to call that. Okay, so getting to, well, drivers and the spin-on thing. First of all, there's potentially some flow and technical drivers in things like the options market. I mean, you've just come to the other side of a major risk event in the form of the midterm elections, and we have this heavy options trading, potentially zero DTEs in play here. If some huge person, and I haven't inspected the flows, this is not something I've based on any sort of analysis of the flows or what clever options folks are saying, but, you know, some heavy zero DTE purchasing with market makers selling that for, you know, tiny amounts. And then when the move extends and gets close to the strike prices, the gamma starts to rise very, very heavily and requires some hedging for those that are short options. Could be a driver, don't know. But in any case, the VIX screamed all the way up to 28 on the day after what looked like a consensus, oh, this is good to be the other side of the midterms time for the volatility to actually fall the prior day. What a vibe shift, what a neck-snapping whiplash-inducing shift in the vibe for sure. The other thing being, I mean, if you look at, in the behavior, and there's just a couple of other things I want to note before talking about why should we be selling off or why were we selling off, built on some kind of fundamental story. And that was to note that, again, something like the P.E. names and heavily shorted stocks, those had been rallying quite smartly. When I say P.E., I'm talking about private equity. And those were in for a drubbing, many of those were in for a drubbing yesterday. And, you know, and then just talking about this bifurcation in the market, these wild divergences market internals, looking at James Chanos out on X saying, look, I'm not sure that the best tactic right here is to flush all of your A.I. names that are down 40 to 70 percent and then go long a bunch of low or no growth consumer names at 30 to 100 times earnings. It might not be such a smart idea either, he says. But, yeah, it's clearly this was a there's been some kind of wild trade put on in the internal. Some were arguing that ahead of these midterms, it was kind of known that there was a risk of a strong Democratic showing. And that would result in this, you know, that resulted as a form of expectations in this outcome that the A.I. trade could get marked down. And therefore, you reverse that trade to some degree after the election. Well, the trade didn't reverse. In fact, it deepened. So that's maybe it was the magnitude of the blue wave that has now caused this. Who knows? But this is a big move. And the question will be in the coming immediate days, of course, is this just a sort of algorithmic thing? Some key players just is, you know, a capitulation finally getting out of these names. And now that we're the active folks have said their piece and done their trades and are max positioned, if that is done and passive is not spooked and passive doesn't start to deleverage, I want to say passive, those that are simply allocating to the market and are massive hands in this market, if they start to crumble and sell, then, you know, all bets are off. But if the passive market holds, then at some point, this, this selling could exhaust itself. We're also getting into the stronger part calendar wise of the year. But let's see. I'm not willing to state any strong claims in my belief in either direction. But I certainly believe that when you get these moves with this magnitude, they need to be reversed and reversed quickly. Otherwise, the volatility risk remains there to the downside. Final couple of notes on the equity market. I mean, the Musk Schadenfreude crowd is out in spades here with Tesla off over 10%. SpaceX over 9%, Elon Musk worth about $120 billion less, not including his half a billion in spending trying to tilt the elections since those elections. So that was a reasonably good call on our part, and actually a no-brainer. It wasn't like it was rocket science to say that his companies could be under significant pressure on the scale of this victory or on a strong Democratic win. That's what we talked about in that midterms preview back, whatever it was, Friday, I guess I put it out, last week ahead of the midterms. Okay, so then I guess what the interesting thing to discuss here was how this risk-off move expressed itself elsewhere. So Europe kind of hung in there. I mean, it did, of course, roll over yesterday and opened down lower. But, for example, the Stoxx 50 in Europe has managed to survive. It's down less than a percent, and it's still above. It's 200-day moving average. So we're not quite into general, you know, the whole global markets are spooked across the board territory at all just yet. Could get there. That's a far more serious business. This is very much mostly a AI trade thing, except for yesterday's action. And then, of course, in the other markets, this is where we need to focus, and that is into treasuries, which did serve their role as safe haven. The dollar was slow to respond to this, but it did come in. And it came in even more heavily overnight as a safe haven. So that felt like good old-fashioned markets there. The yen just kind of back and forth, started to show signs. Then it didn't. Then it did. I don't know if there was a little bit of intervention thrown into there. But dollar-yen, it bulled up into that key resistance range once again. Came off, traded even below 157.50 at one point overnight. That key resistance range, by the way, 158.50. Tried to sell off again this morning. But with the. The risk-on rally, I suppose, we're seeing the dollar. Sorry, the yen is weaker once again versus the dollar. So us FX old-timers are having a hard time with this Japanese yen. When you see this crush lower in global yields combined with risk-off, it used to be just absolute catnip for the yen. And it would just scream higher in those types of conditions. It has not done so this time. Maybe the Nikkei. Hang off 6% says a little bit about that. But to me, that's not the story. It's a conundrum. I would have thought at least the yen would outperform in the crosses. It kind of did to a degree. It did manage to track the stronger dollar at times. So at least there was that. A pair like Aussie yen. So we finally see Aussie performing its standard nosedive when you see global risk off. It did so very much so yesterday. So Aussie dollar, in fact, down at a seven-month low all of a sudden after. You know, after trying to establish itself back above zero spot 70. And then Aussie yen clearly changing directions, too. We have U.S. Treasuries. Again, they rallied quite strongly, mostly at the front end of the curve. Their yields at the longer end of the curve were also a bit lower. Or at least the 10-year was about five basis points lower. The two-year about 11 basis points lower before coming in a little bit higher this morning. Credit was shaken, but not profoundly so. So we did go back to the cycle highs, but we did not exceed or make new cycle highs. And the yield spreads and high-yield credit versus U.S. Treasuries. You know, coming like Corweave saw its bonds under pressure. But some of the other names like Oracle and what is it, Paramount Global, I inspected those. They didn't show any sort of deterioration. Kind of worth noting as well on the FX front. So you get a little bit worried about the Europe when you see risk off. You know, is it shaking risk willingness in terms of French sovereign bonds? And you did see the spread between Germany and France widening yesterday by around, I think, 10 basis points from the low to the high. But that was a function of the bonds, the German bonds being a safe haven. And French yields were nominally slightly lower. So I would say those would have to head in opposite directions for me to be more concerned about the Eurozone sovereign debt stability idea for now. Bank of England, they voted yesterday 8-1 in favor of the hike. Everybody wanted a hike. There was just one that wanted a bigger hike, but they only delivered the 25 basis points. So it was expected slightly more hawkish guidance than I was expecting. Bailey saying, look, it's unlikely to be the last hike unless the Iran war is resolved. Still, he wanted to buy a little bit of optionality in his statement that, look, this is also not inevitably going to be a long sequence of hikes. So clearly would love to decelerate if you could find the excuse to do so. So then it's up to the market bets on incoming data as to where Bank of England policy goes in next. And all of that just sort of got this tsunami of risk off, sort of erased any reaction really, which was initially positive for Sterling. And we've come from 135 in cable all the way back down solidly below 134. In fact, I wonder if we get another risk off wave, if there could be some pretty significant consolidation in something like cable. So Sterling versus the dollar lower, given there's probably been a decent buildup in Sterling long positions versus Europe and just has not had its eye on the ball of general risk sentiment, which Sterling tends to not like when things go pear-shaped, as the Brits like to say. So there's another one they like to say, but I won't say it here. Something being up. And then we also had the Nordisk Bank yesterday. More hawkish hold than was expected. They were expected to hold, but the rhetoric was a bit more hawkish on further hikes needed. It was a very modest attempt at a reaction to that. But again, the general risk off in the background, also the fact that we've come down so much lower in oil prices, saw the Norwegian krona generally a little bit weaker. All right. That pretty much brings me to the end of the direct market commentary. There's just so much heavy selling. It's hard to pick out news items that are specific because everything just kind of gets, tends to get caught up into the same trade. And it's varying degrees of pain based on the general market beta that a given instrument has. So something like, SanDisk being one of the worst is because it was one of the best on the way up, for example. But a few links in today's podcast episode description. I saw a comment from Nassim Taleb on X. And I wonder if he might be right. We shouldn't discount the risk that, or overly discount the risk that Trump might be thrown out of office. I think certainly the level of crimes are there. I think that does appear. And based on various noise bits that the Democrats are preparing to go after him. And I do feel like the cycle is more serious this time around because there's just so much there to go after. Then there are a lot of people saying, no, this is ridiculous. This always proves to be an own goal when you do this, because the general population is saying, stop distracting yourself with this, get after the real issues. But I think they'll go after him. And but then the secondary or the second part of what people will say, is who cares because you need two thirds to get victim. So yeah, the house will make a vote and they'll make a fuss and they'll impeach him. In fact, Kelsey has that at 75% odds that he will be impeached before he rides off into the sunset, supposedly in two years time. Um, but, and, but a 25, sorry, wait, is it 25? No, it's a, um, 50% odds that he's impeached by August 1st, but 75% odds overall. But just a refresher on how the, um, uh, throwing a us president out of office, of office works after impeachment. It's the Senate that has to rate. And then the impeachment happens in the house. The Senate is the one that has to do the vote on whether to convict, uh, the president. And that has never happened before. They got within one vote of doing so with Andrew Johnson, the president after Lincoln was assassinated and Nixon kind of knew the writing was on the wall and he never even suffered the impeachment part of the process. He just said, I resigned. I'm going to go forward. It could get going because party insiders indicated to him, like we don't have any choice, but to go against you here. So that was his way to tackle it. In fact, I think there's a 24% couchy odds on Trump resigning. So let's assume what are the, what are the maths look like for that two thirds vote that is needed by the Senate to actually throw him out of office with the easy assumption that the house moves to impeach because it merely takes a majority in the house to get that impeachment. Uh, if we do get the 56,000 votes, the 56 democratic senators. So the Alaska and Mississippi do fall to the Democrats. It still requires 11 Republicans to cross the aisle and to vote in favor and for conviction. Um, per Taylor's comment, he says, qui bono, meaning who, you know, who benefits maybe, maybe there's, you know, showing your bona fides as distancing yourself from Trump could actually be a motivation, uh, for some Republicans. If Trump remains that profoundly unpopular, I don't know. I just, I think let's expand the window of possibilities here. Maybe this could happen is, is my only point in bringing this up. Uh, that wasn't a link. That was just a spiel on, on that risk. But, uh, and another spiel was, um, one from Scaramucci, uh, who he said, he's a very smooth talker. He says a lot of, uh, let's call it crap, but he also says, uh, some quite clever things and has some astute observations about Trump's personality, having been close to him. And this one, it resonated as something that I thought was, was fairly accurate or likely to be fairly accurate. And has, is Pittsburgh Trump, And what Scaramucci says is that, look, Trump actually wants the Republicans to fail now because in his narcissistic way and worldview, the whole party was basically him and that without him, they are nothing. And so that deserves to be demonstrated as he is no longer relevant for public office, that they go down. They're no longer a part of his, you know, whatever ego or their success has nothing to do with his success or his image. I think that's quite relevant and it shows about his focus as well on these monuments, these buildings that he probably the last thing is motivating him to get something done in this last two years in office. If he stays in office, ballroom, Arc de Triomphe style, Triumphal Arch, whatever. The buildings may be. And then there's a comment finally on all these little comments and these topics that are not really about links, but about talking about the spin on things, which I think we're all trying to figure out what's going on here. And I think it's important to discuss these things as important inputs. But there's the comment from Albert Edwards. He is a strategist with Société Générale, has been for forever, really. Wondering if we should think that this kind of rhymes. It sort of rhymes with Labour's victory in the last election in the UK, which was certainly a referendum on the stumbling Conservative Party. Now, some of that vote, a lot of that vote went to reform. And actually, Labour only got, what was it, 30, low 30s or mid 30s? I can't remember which percentage of the popular vote, but ended up with a massive majority in the House of Commons because of this first-past-the-post system. Curious to see, by the way, if they managed to do something about that. And a change to a more proportional representative system. But in any case, I don't know. There is the similarity in this U.S. election that it was a repudiation of Trump as much as or far more than it felt like any kind of support for the Democratic side. And so the Democrats could quickly squander that. Although the key difference is they're not really in power here, whereas Labour immediately shifted to actually being in power. So I'm not sure that's the right. That's the right model for what's going on here. And if it is, it's going to be over a much more stretched time frame if the Democrats win in 2028 and then things are still dysfunctional for the average Joe out in 2029 by that point, whatever. So I would push back against that one. OK, now to the links. And actually, before I get to the links, I think I remember going back to what I was trying to promise in terms of the market rundown. Talking about what is the. Mentality here. What is it that's driving this big sell off? I offered the suggestion that some of it could be technical. Some of it could be positioning some trouble there. I've seen a couple of posts about hedge funds that are blowing up, likely ones that were sort of all in on the trade. They certainly weren't trading the S&P 500 eco weight, which hit an all time high the day before yesterday. So there's that. But the more sort of fundamental story that you could piece together here is. That and I alluded to this to a degree, but maybe the market taking it more seriously now. And what are the knock on effects? And what I mean by all this is that if we are seeing a general policy move to slow down the data centers, if there's a risk of stronger oversight to slow down the implementation of some A.I. as well, maybe raising the risk of liability to those companies that are making the A.I. or whether it's open. A.I. or otherwise, this means that we slow down that trade. It's been a key driver of risk. But more importantly, it's been a key driver of markets. And with this reversing out, it also does damage to the economy, not just via the activity on the ground. Data centers not going up, all those high wage jobs that will be getting less work potentially if it's actually going into outright decline is hard to believe. But it's certainly a slowdown and the bidding up for prices for all the components. And even the. Wages to get stuff done and it hits asset prices. Asset prices are a key part of the U.S. economy, the wealth effect, the confidence effect, especially on the consumption side for the overclass that owns all of these assets. And as we've alluded to many times, there was that Wall Street Journal article citing data that it was the top 10 percent of the U.S. I think in income terms, it would surprise me if it wasn't a wealth terms as well or even more so the drives at least half. Of overall U.S. Spending. So there's a snowball and reflexive effect potentially in there if this if this trade comes under pressure or even under even more pressure in the days and weeks to come. OK, so hopefully I check that box. Let's get on to the links if we can ever get there. One will be to my FX trader piece I put out earlier this morning again on the dollar finally serving as a safe haven and some other observations and the rundown of the central banks that we saw this week. There's this very interesting post and I wonder if it's true as well from this guy, Joe Navarro. I don't know if he's a little bit of a snake oil salesman, some guy who talks a lot about, you know, body language and stuff like this. But it was just a really sort of well-written prognostication of what happens or thoughts on what happens when a malignant narcissist is in their what he calls the entropic stage. So they sort of the evidence clearly points to. They are going down. They have been rebuked. Of course, this means Trump at the midterm elections. And what is the behavior pattern you see when they've gone beyond this phase? So the final downfall, what is this to start to do in terms of, you know, reaching out and assessing blame and doing retaliatory and vengeful things? So just just to put it out there as a thought on a totally different note, there's this hedge fund manager. It goes by the nickname Cuppy. I don't remember his actual last name, Kuppenfelder or something or other. He's just quite a character. He's a very charming guy to listen to talk. And he's somebody that looks and looks around for investment opportunities that are going to offer, you know, five to 10 times return on the investment. So knocked down names. He tries to look away from all the stuff that everybody else is speculating on frenetically. I think maybe in this environment, something that's appropriate to do. Because it's so hard to figure out if you're getting, you know, buying into a sinking ship, if you're buying into the story and to look where nobody else is looking, it kind of fits my way of of doing things and being a little bit contrarian as well. You know, he hasn't had a great record over the last couple of years, but he's has had some spectacular success in prior years. And it's more just considering his approach. I think people might find enriching. And then there's a those latest AI deep fake. Humor, a viral thing going around where all of the top, you know, hyper billionaires are dressing up in hippie clothes and singing a made up song about we were always blue, sort of how they're all going to pivot to pretending that they support the Democratic side after these election results. It's just nothing but good humor and fun there. And finally, this one, just I had no idea whether we're talking about something we need to consider for the. Longer term, but I think it has huge consequences for the political environment from here, if it is the case, and suggest that maybe we're beyond this peak social media peak outrage cycle because of the algorithm outcome in our politics and our way of looking at the world, sort of choose your own reality. And it's a post from a guy named Sumit Roy who asked whether Chad GPT swung the election, because when you instead of just sitting. Sitting there entirely passively listening to your your social media fees feed and social media to me is the most misnamed thing in the world now because it's not social. It's you're just a vessel being served stuff. But rather than that being what serves you and it serves you and this serves you based on outrage, which is the thing that keeps you engaged the most number of minutes, if you you're using your LLM to just ask about. Things and consider them the LLM kind of explains thing in a sort of a neutral, cautious, bland kind of way, calm you calmly walks you through the evidence and maybe defuses you rather than, you know, sending you down for even further down the rabbit hole into the next circle of outrage in some kind of nine circle hell of fashion metaphor of things. So I just I hadn't thought about that. I think he refers to Joe Weisenthal of. Odd Lots podcast to ask the same thing. Just a little theme and something to a little hook on an issue that I'll continue to look in for evidence. But I would certainly love if it means that we can get towards a less partisan political environment. And that was really it for today. I mean, you know, it's always interesting how and, you know, we haven't talked about the Iran war and the risks there. Is there a kind of fear and loathing ahead of the weekend again, or is the market just more concerned with this AI trade is not even thinking about that. So I'm really curious how we. wind up this week. It was a dramatic day yesterday. A candlestick in the case of the NASDAQ 100 cash session yesterday, which was almost entirely what they call a marubozo in candlestick analysis, a sort of clean-shaven or bald candlestick with no wicks, so no upper shadow or lower shadow. You open on the highs and you close on the lows. You see these really big marubozo candles on bear markets. You simply do. Of course, you see them in other places too, a lot of times driven by news cycles, so key headline risks. Was this midterm election a headline risk or does it really change the rules of the ballgame here for a bit? That's what we don't have the answer to yet. But if you go back to the 2021, late 2021, beginning of what proved to be eventually a bear market, you see sprinklings of these pretty chunky marubozo days in the early phases there. And of course, in the middle phase as well, a sign of a really heavy selling pressure to the market. So you see a lot of these marubozo days in the early phases there. And of course, certainly what we got. Let's see what we get in coming days. Don't forget the Iran war. Stay nimble. Stay careful out there. Have a great weekend when you get there. And we'll be back next week 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 saxomarketcall.com. You can also send us an email at marketcall at saxobank.com. That's marketcall at saxobank.com. Saxo. Serious trading worldwide. Thank you.
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