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, 5th of November, 2026, and we have very interesting market internals. I think we're approaching, perhaps, in a reasonable time frame, a couple weeks, a month, I don't know, end of the year, another possibility, some kind of apotheosis of this remarkable backdrop, which has been that if AI hardware and the likes are up, then the broader market is down and vice versa. So we saw that in spades yesterday with, yes, we ended up the day actually somehow overall up close to a percent on the NASDAQ 100. Over 1.5% on the S&P 500, but there was a notable and profound weakness and many of the data structure, data center infrastructure names, especially power providers, but even the chips names. So we have the SOX index down a full 3 plus percent on the day. And then you look over at the old S&P 500 equal weight index up 1.86%, hitting an all time high yesterday. There are so many sectors that are up. So we have the S&P 500, which is not one of them. There was a little bit of a sort of a spin on the fact that some of the hyperscalers, not all of them, by the way, had positive days. So the Amazons, I guess the idea would be, well, if they can't build the data centers, this reduces their data center spin and their underlying profitable business can flourish more. So we saw Amazon and Microsoft, I believe as well, gapping considerably higher. Meta a bit less so, but look at what did really well yesterday. And that was consumer staples, consumer discretion. And that's what we're Real estate, of course, the lower yields helping out there. And under that, homebuilders, of course. Financials, a stellar day there. Materials as well. And healthcare having an amazing day. Although I need some nuance on healthcare, and I'll get to that a little bit later. Defense was down heavily. There's a twofold thing there. I think there's going to be some more reluctance from a democratically, and now very powerfully, democratically controlled Congress on spending bills related to defense. They're going to drag their heels on that. There was even, I saw a Wall Street Journal article on the Democratic leader of a key committee wanting to investigate the Pentagon on some of its spending style. And there's even the risk in this lame duck session of Besant moving on something for some physical consolidation. After promising an expansion of some defense outlays. There is the spin as well that, oh, it was the Iran war, J.D. Vance saying as much, that cost the Trump side the election. And this idea that the U.S. is going to walk away. That is a very controversial take, and I have a lot more to say on that. I'll send a link that has a more qualified set of thoughts on how we should look at this Iran situation at the end of the podcast. No surprise that it's Michael Every weighing in here. And, of course, with this blame on the Iran situation, this shift in odds on data center, again, a couple of links there. Why this is, there is a profound risk here that the pace of data centers has to come down, at least building out those in the U.S., if not necessarily in the rest of the world. That is why you're seeing chip companies down, hard disk companies down, Dell getting absolutely smashed once again. Specific, you know, a couple of profiles politically you can focus on that won elections in part on their approach to the data center issue. And then, you know, Iran won't cost Trump the election, therefore he'll be no longer wanting to follow the Israel agenda on its existential need, supposedly, to see regime change in Iran. So we have oil absolutely crushed lower. January Brent down at $94.50-ish. I think it actually ticked a bit higher since I wrote down that print earlier this morning. WTI, we're still in December, but it's at $87.50. So, I mean, we've seen the front trading contract coming down on the order of $20-plus from recent highs in the case of Brent. So, obviously, that just, you know, all other things equal provides a nice little boost. It helps out the global outlook. It helps out inflation, is a reviver of risk sentiment. What else do we have? We had Nikkei down a little bit overnight. I think there's a tech angle there as well. A lot of the big gainers in the Nikkei have been related to various technologies, industrials into the data center build-out. And then Kospi down, no big surprise there either with the two huge memory names there, down over 5% when I jotted down the print. And then Europe sailing in with a really nice session this morning. It's up even with the Nasdaq futures down another few hundred points overnight. Europe comes in up after being up almost 2% yesterday in the case of the Eurostox 50. The VIX getting absolutely hammered to smithereens on the election outcome, even though it was a maximalist Democratic victory. And it looks like we're going to be heading towards possibly 56 Democratic senators, the Mississippi vote count. And again, we're talking about Mississippi and a possible Democratic senator there, completely inconceivable before this election. That one is insanely tight, and the Alaska count is taking some time as well. It may be some days before we know that. On the House side, it looks like we could be heading for 260-plus on the Democratic side to, of course, a much, much smaller Republican side. So that will have reverberations. It will have consequences. As for Trump himself, I noticed that there's been a lot of people noting his somewhat conciliatory tone. I guess the pounding was so thorough he doesn't want to put up a fight and maybe it looks bad for his image to do so. So he's switching to other priorities. And I've noticed a couple of observations that I think are very true. Trump will not fight for the GOP. Trump only cares about himself, so he won't be sticking his neck out for anybody else. He won't be at all interested in how or who becomes the next candidate, I guess, unless maybe one of them weighs in against him and he feels personally insulted. But he may be more busy with what he feels important for the next two years, which is not necessarily policy, but his legacy in the form of buildings and monuments. That's the hint we got about his extensive discussion of his ballroom yesterday, this triumphal arch he wants to build, all this kind of stuff. He likes these monuments to his ego, I think, more than those other factors that a normal politician would be more focused on in the last couple of years. I don't think that necessarily the Iran situation necessarily has 100% to do with Trump, although he is the commander-in-chief, and I think he also blames Israel and the Iran war for his defeat as well. So what does that leave that situation? Again, I'll get to that at the end of the podcast. Now, we saw – let's see. I guess I'll run through a few individual names that were on the move, some of them reporting earnings. Qualcomm down over 9% on its earnings report. Armholding is also down after a week's session, if I recall correctly. McDonald's, again, these companies that are consumer and et cetera, up 6.5% after its earnings. Uber was kind of flat. CVS, a very interesting story there. Actually, I'm going to save that one. App Loving, up just insane levels here. This is a company that puts sort of, I think it uses AI to figure out what ads to deliver on various mobile applications. Obviously not really linked to raw data center build-out, but linked to the application side of AI and other factors. It's been in for a revival. It could be short covering. It has had a very long run lower, I assume, on just a deflation in its valuation and probably some short selling. Datadog down 14% yesterday, and Snap down 11%. Today, the earnings, there were a few companies that weren't sufficiently high profile for me to jot down. I think Cloudflare was the most interesting tech company reporting today. Oh, and then as noted yesterday, so we've seen quite a profound turnaround in the precious metals here. And this is a, you know, it's always interesting when these types of turnarounds happen over a key event risk like the midterms were to mark somewhere where we were in the political cycle. But obviously, it's helping out that the oil prices are coming down. There's been that relationship. It removes the risk of things like central banks having to slow their purchases because they have to worry about the cost of living or even selling ounces, as has been the case for Turkey, to fund oil import bills, et cetera. So there is a relationship there, and therefore to the midterms via this Iran detente, whatever, logic. So that would, of course, potentially face a test if suddenly, again, we see a resumption of hostilities. But for now, the fact that this gold rally unfolded quite strongly over that $4,000 level puts that $4,000 level in as the key sort of bull bear line, not to mention the nominal lows below there. Similarly, on silver, around the $50 level, I would argue psychologically, since it probed down below, what was it, $49 an ounce, and now we're pushing towards $53. So quite a profound reversal there. It's technically significant until proven otherwise, and sort of resets that market. And again, because both, well, especially in the case of silver, it looked like you were violating lows in the most momentum traders, the CTA types, trend followers, would have all been getting into sort of short positioning because of where the price level had been taken to. And that has seen these people, some of the energy in the move is from these people getting stopped out of fresh and aggressive positioning. On the crypto front, we're seeing a rebound as well. So some correlation there with the gold, but there are, my colleague Kuhn noting that there have been some sort of crypto outfits that are suffering some extremely rough sledding, presumably on the increased regulatory or the risk of increased regulatory scrutiny on the crypto front. I don't really follow this space. There are some names, I can't remember them, but they were down very heavily, even though the price of crypto was up. So that's, probably some crypto traders out there are scratching their heads a bit at that combination. In terms of the dollar picture, not at all consistent, slightly weaker in places, but it's just not been enough yet. We can't seem to even get through this very local resistance level on Euro dollar 112.70. That is the first key for a dollar move, suggesting we're moving significantly lower in the dollar. That's a bit disappointing. You would think the Euro would be better supported on this come down in energy prices and the come down in yields, which is helping. We're seeing those French bond, the French bond market as well. We've got the Germany-France yield spread down below 150 basis points this morning. You are seeing headlines, and that's despite those headlines you're seeing this morning, of the deadlocked negotiations on the incoming budget. They need to increase spending according to the people that are protesting and their threats of fresh strikes out there to raise minimum wage, for example, is one of the demands. Let's see where this heads. Certainly, you know, bare minimum, let's vault through this 112.70, even through 113 on Euro dollars, and we have something breakout-wise that suggests a trend is at least trying to establish itself. Otherwise, we're none the wiser, and we're stuck in this lower range. And then dollar-yen, disappointment after disappointment for those looking for the yen comeback. Not sure I have an explainer here for that, but we tried up into that 158.50, massive line of resistance yesterday, came back down over and over again, and we're seeing that overnight, and here we are bobbing back above 158 once again in today's trade. So, you know, what do we do with it? It feels like the authorities would push back if we get above 159 again in dollar-yen or even above 158.50, but it just doesn't seem to be able to influence the situation. And then the massive disappointment that even with energy prices crushed lower, and we're sitting here at multi-week, even almost, I think, two-month lows in dollar-yen, we're still stuck here on resistance in dollar-yen, not able to get a yen rally going. Something needs to change structurally, apparently, or policy-wise to get that trade moving. In the meantime, it's very frustrating for anybody that wants to sell the yen because there's always this risk of intervention. And then we had the quarterly refunding announcement from the U.S. Treasury yesterday that did not strike down the 20-year as some were speculating they would, and they did not reduce the stock price. So, we're still going to do 125 billion in, what was it, 3s, 10s, and 30-year auctions, and that was basically unchanged. So, there was no angle on Treasuries from that important announcement. In economic data today, we got the Swedish inflation in, and the Riksbank was reasonably hawkish yesterday. I don't know if you could call them hawkish. But they did do the rate hike, guided for more hikes, said that economic activity was strengthening, and did this odd change to their policy around how they manage their FX reserves. They won't be doing FX swaps anymore, but doing sort of buying and selling in the market, I guess, and that means that they have less. It's probably a move aimed more towards managing their sort of mark-to-market risk from month to month than the week-to-month. So, it's a move that, as I said, has nothing to do with monetary policy, this move. But that low inflation print is seeing, after the Swedish krona was stronger, is seeing the Swedish krona weaker this morning, and could set up a decent little consolidation for fresh shorts to get involved, who knows, around the 11 area in Eurostocky. The trend is to the downside, I think, here in the short to medium term. The Nordic Bank today, the Norwegian Central Bank, keeping a slightly more hawkish stance, a hawkish hold, as the headlines are saying. The rates market suggested they were going to go for a, you know, pulling, I wouldn't say go for a dovish move, but just pulling away some of the hawkishness. It didn't seem to be the case, if you look at the price action in the Norwegian krona, which has actually rallied a bit here. So, that was a bit of a surprise relative to what I and the market were expecting. Bank of England is up later. They will be hiking rates by all appearances, and then it's about Bailey. So, that's a bit of a surprise relative to what I and the market were expecting. If he's still dragging his heels. On the guidance, you know, does that match the forward expectations from the market of all these incoming further hikes? I mean, he's kind of already been dragging his heels, and the market's not really paying attention. So, I'm not really sure how to read the situation. It does feel like Sterling is standing atop a pretty decent rally here without any consolidation. But I think it feels like maybe the Bailey and company need to make a pretty stronger, or a much stronger dovish shift to get Sterling down to the weak side. Well, let's see what the price action looks like and what they say post this meeting. Could provide some information value on where the market is at. All right, and now on to some sort of long-term thoughts for the day about this midterm election result, and a few links that I think are very much worth your time to consider. So, the first one is to Michael Every's ex-post on a number of points he makes about the Iran conflict and other conflicts, saying that in the case of the Russia-Ukraine situation that Russia could feel actually emboldened, or Putin could feel emboldened by what's going on here to press his case in Ukraine. But then on Iran, saying that, look, I mean, you know, not doing anything is not a longer-term solution to the situation in Iran either, and does not necessarily guarantee stability. And who's to say whether, you know, Trump won't go ahead with whatever was in the works as promised anyway in the coming days. And, you know, as we've talked about what that could be, all the way to the slightly unimaginable, you know, given statements by the likes of Senator Chris Murphy from Connecticut, the Democratic senator who said some of the plans were insane, it would only cause a worse escalation. The market, especially now, is not at all prepared for that. So this is really critical stuff if something happens in coming days. And then again, if it doesn't, what is the slow burn situation that we sort of settle into? I'm not sure, that we are any the wiser on where this could flare up again. But further thoughts from Michael Every on that, I will put the post again in the episode description. There is a FT article about the, you know, the presidential race essentially starting today, reminding somewhat importantly that basically, if you look back at the previous cycles, for example, I mean, Trump essentially declared right after the midterms in 2022, I think it was the month of the midterms, and Obama really got going with his declaration of interest to run in February of 2007. So that was a mere two or three months after the midterm elections. So there'll be a lot of positioning, a lot of activity on the ground, we can track who those people be. I really struggle to believe that J.D. Vance emerges as the Republican candidate. I think Rubio seems a bit more mainstream, but is he too mainstream if we're still in some kind of populist moment? Or have we in the U.S. exhausted ourselves with the Trump moment after the last 12 years or 10 years? I don't know. It's far too early to get that worked up about it in terms of financial market impacts. But it's always super interesting to track these things. Also, who emerges on the Democratic side, likely within the next handful of months. And the only thing I will guarantee 1000% is that Harris has absolutely no chance of emerging with any relevance in terms of the candidate. Also, then go to it's Matt Stoller's substack. He's the writer of this great book, Big. He's very much a anti-monopolist, arguably very left-leaning person as well. But he's also a very clever guy with some great analysis and just coverage of what's going on, on the lines of monopolies, etc. But it's his substack, but he's on leave. And there's this guy, Lee Heppner, who wrote a post on the U.S. election and how historic it was. I tend to agree with most of it. I think this really was a profound election here. And especially along the lines of it being an anti-monopoly, anti-crony capitalism election. And there could be some pretty profound things afoot. And one of those things that already is afoot is this CVS Health announcing a split, essentially because, as Heppner argues, they see the writing on the wall. There is this Holly Warren bill. What's it called? It's called the Break Up Big Medicine Act. And it is a very serious business because it is being proposed by a Republican senator. Josh Hawley and left-leaning Democratic Senator Elizabeth Warren. It was proposed by them on February of 2026. And it essentially says you cannot have these vertically integrated companies that are one of the main drivers of these ridiculous drug and healthcare prices in the U.S. where you have a sort of a drug wholesaler and the so-called pharmacy benefits manager and the insurance company all in sort of colluding to play a hot potato with the pricing. And it ends up, you know, you just, you see insurance providers and others having to pay insane prices because of the different parts of this vertical integration that they're in control of. And it's, I think it's a profound recognition that something really is afoot from an actual company. So CVS will be dividing itself, I guess, into two. I haven't really looked much into the details. There in anticipation of this coming along. There's been no, I mean, the bill hasn't moved forward, but it would be likely introduced in the next Congress. And I guess the figure has pretty solid odds of passing. It could mean a lot for the healthcare industry in the U.S., the profitability of specific companies. CVS was down massively yesterday, even though, as I mentioned earlier, the healthcare, at least the broad healthcare ETF that I noted was up very strongly. I believe it was a new all-time high. So something to track there. I would suggest that if they're moving in the direction of anti-monopoly on medicine, that this part of the U.S. inflation could be becoming less inflationary. But I do think, just to go back to the Substack post, he asks a number of questions. You know, was this, for example, an endorsement of the Democratic agenda? I would agree with his assessment that no, it does not. But that you have a whole lot of different races with a whole lot of candidates running on very different levels. And I think there's a lot of different things. But you can see some patterns emerging. And that is especially in the case of, or one of the patterns especially emerging is, well, anti-monopoly, anti-oligopoly, anti-sort of large companies, you know, not bearing the costs that they impose and getting all these tax breaks. So here, especially thinking about AI infrastructure, where, you know, the company comes in, they get all kinds of tax breaks, they stress the heck out of the local infrastructure. And is that fair relative to, you know, do they have to pay for it? Then should they be paying more for that infrastructure costs? It really is a move in the direction of labor and away from wealth. And I think that is the big shift that is going on here. If we look at the arc of history, we have the sort of consensus of the 60s, the great society programs were taking down, of course, on the cultural side and the important social policy side, all of the Civil Rights Act, all the racism and all of the segregation that was happening in the South. The social programs, Medicare, Social Security, et cetera, that was a bipartisan consensus, not huge differences in the positions of Johnson and Nixon, for example. Then you had, you could argue, a sort of a Carter interregnum because the whole system was kind of failing from inflation and from, yeah, it was just, there was a lot of dysfunction related to the price of energy coming in and a shock to the system, as well as the inflation caused by, abandoning the gold standard in the US. Then with the Reagan, you get this Reagan consensus, which in economic policy terms really continued all the way through Bush Jr. Clinton was arguably more responsible for pro-Reagan policies than Reagan himself in some cases, especially Rubin and the whole dismantling of Glass-Steagall. All that stuff happened under his watch. And then Obama tried to tinker with social policy, but the essential economic policy was not notably changed, especially after he completely lost his mandate. After the first two years when he squandered too much of his mandate on mostly unsuccessful attempts to reform healthcare, which in some ways ended up being the worst of both worlds, even though its intention was to provide some form of more socialized approach to medicine. And it really was the response to the financial crisis that helped to cement the rise of populism with Trump promising a lot, but I think he didn't deliver on the populist side. He didn't deliver really for the little guy. Except on those social conservative issues that many of the little guys out there were very concerned about. Delivered on that front, but didn't really deliver on the popular front in terms of making the little guy feel like he was getting a better cut of what was going on in the world. And I think that's where this election has taken us in a different direction of that relative balance or imbalance in corporate power versus the power of labor. As well, people are concerned about local issues like school closing. Do they want to see a bunch of conservative programs to give private schools vouchers instead of just seeing their local school actually being funded and working? That was an on-the-ground issue in Texas, for example. And you can see that. So this Texas governor candidate, by the way, Hosa, she's very interesting because she sort of avoided all the cultural stuff that has gotten the Democrats in trouble in so many different jurisdictions. Just avoids that issue. Totally goes after the economic populism. And essentially is what I would say an embodiment of left populism. Make sure schools are funded, make sure that we're not unfairly skewing all the favors and tax cuts to the corporations, make sure schools are working, deal with the healthcare costs, et cetera. This left populism was winning out as a general pattern. And even the Texas Attorney General is really going like laser focused in on this issue of corporate power. You can read about him. I didn't even jot down his name, but just look up Texas Attorney General and you will find it. Really, Texas is one of the epicenters of the whole data center build out. So this whole approach by these new politicians will have a profound impact on the ability to scale AI infrastructure and is one of the reasons we're seeing hardware names down. Then the theory has to be, if you're still super bullish on AI, is that the AI calculations themselves are able to create this huge value add that is then picked up somewhere else, in the system, but not necessarily in just brute build out of CPU and GPU cycles and memory cycles, if you will, to build out these data centers. Final link, and I'm going to have a really hard time because this is a podcast that you prepare for in a daily cycle. These are thoughts that are on issues that are of absolutely profound importance. And this is a link to Brent Johnson of Santiago Capital. He's sort of been talking about this for a long time, but he's sort of a maximalist on the idea that we're headed towards an ever greater dominance of the U.S., both in terms of the U.S. dollar and its power in the global financial system. The U.S. presence itself really feels like we're heading towards a maximalist, or according to him, maximalist U.S. empire moment. And then using the parallel of the transition from the ancient Rome, from the republic phase to the empire phase. If you haven't read about that, it's absolutely fascinating. He puts out an ex-post this morning, or whenever it was, yesterday, indicating that, look, this election doesn't change anything. You just get sort of a tick and tock back and forth, but the overall direction is the same, what he calls the pendulum and ratchet. So the pendulum means you swing back and forth through the two parties, and the ratchet is that we're just continuing inexorably in the same direction, which I guess he feels is towards some massive global moment where the U.S. is totally dominating as a hegemon around the world. I'm not sure if I 100% buy into that. I think it's an interesting and compelling model for what is going on here. But this tick tock, this pendulum just swung pretty drastically in the direction of left populism. Let's see what emerges, though, down the road. And in this model, this is not just about march to empire, U.S., a huge empire, global dominance over the region or whatever. It's a sphere of influence. But also, I assume he means away from a republic and more towards an empire structure, which would mean a very authoritarian regime. And that looks very different. You've seen shades of this and what was feared and what was coming under a Trump administration, abandoning constitutional principles, seizing authority from the executive branch on an unprecedented level, etc. Is that the ratchet? Is that the direction we're headed? And you could argue that one thing that would support the idea that we're heading in that direction is that if you have and you continue to have an incredibly divided country and incredibly divided politics, that that gives the one side, whichever side it is, the excuse or the thought process that, look, we have our constitutional principles, we have so-called democracy, but we simply can't afford to do that. And so I think it's a very interesting model. It's just simply unacceptable to have that other side in power ever again. Therefore, we're willing to go back on our principles and allow this seizure of the reins of power by our own side in an undemocratic way and get rid of the democratic process or make it sort of symbolic and theater rather than having real impact because we must simply stay in power. The other side simply cannot have control. And that is, I think, a real fear. The question would be, which side is it? The other question would be, which side is it? And the other question would be, which side is it? be about to supersize into something else. And I think, of course, Johnson believes the latter. Others would say it's no, it's just about the U.S. dealing with it's already had its maximum power moment and will now face this sort of consolidation period or whatever comes next and actually some kind of decline. And there are other strong voices on the latter. I'm not sure where I sit, but let them break out the popcorn. These are massive, absolutely titanic issues for the direction of not just the U.S. economy and markets, but really the whole world, how all of this plays out. So that was my best attempt on a daily podcast cycle to put across those thoughts. It's something I'm sure I'll be touching on again in the future. I hope you find that type of discussion as well, the historical perspective interesting. By the way, there was a really good question in the chat. The rest is history podcast. If I remember to, I'll put it in the podcast episode description as well. This is a wonderful podcast if you're not aware of it. One of the most popular, if not the most popular history podcasts out there where they run through the whole Marius and Sulla episode. Super fascinating episode in the formative transition period in the Roman Republic as it was stumbling its way towards empire. Really the major episode that came before the Julius Caesar period. All right, enough of that. Let's call it a day on today's podcast. Super interesting markets with these massive divergences. How much longer can we see the broader market smashing to all-time highs here in this suffering tech sector that's sucking wind in the background? Do we flip-flop back the other way? Does everything start to decline because we're worried about growth if the AI trade is stumbling? I don't know, but there's a lot of energy in this market and a lot of potential energy in this market. So we need to stay careful out there. And I'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. I'll see you next time.
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