The narrowness of the advance at least a medium term concern.

Welcome to the Saxo Market Call. Before we get started, it's important we emphasize that the views and opinions expressed in this podcast are those of the hosts and guests and do not constitute investment advice or recommendations. All information provided is for educational and entertainment purposes only. Hey everyone, it's Wednesday, 23rd of September, 2026. A bit of a late start here in the podcast studio, of all reasons for a fire drill. So there you have it. Yeah, where are we? Well, we had a 0.00% close on the S&P 500, so everything was very quiet, correct? Well, not quite, but things were a bit quieter than the previous day for sure. Still having some residual enthusiasm in the AI hardware space, a little bit of a shift in the pattern. Micron was up heavily, although the Korean, at least SK Hynix, didn't notice what Samsung did. Not up overnight. And yeah, just some knock-on or follow-on effects from the announcement that Meta's Muse seems to be doing very well. More enthusiasm in the CPU space. All that was covered in yesterday's podcast, by the way. Some feed through into some interesting other names that I wasn't really, or at least only peripherally aware of what they do. This Monolithic Power Systems, one of the top gainers on the S&P 500. They do these apparently sort of the silicon and the power management systems that are used to power the S&P 500. And they do these sort of the onboard or very close to the data center CPUs and maybe also GPUs actually. These huge step-ups and downs in current and voltage, et cetera, to get the right power. And there's a lot of power going into these racks, insane amounts of power, in fact. And so this is a key element of what they do. They had a huge day yesterday, and they're seen growing at rates that have not been seen before. There was also some kind of news from Vicor, a similar company. Or at least doing similar things in the data center. So you can chase down the news on these types of semiconductor and what you can call picks and shovels types of names into the data center space if you care to. But yeah, otherwise, I just want to note, we talked a lot about these divergences across the market. It is a narrow advance. We're going in on the, we're heading towards these record highs on the NASDAQ 100. We actually managed to reach them in the not now, so-followed NASDAQ. That used to be what was followed back in the day, especially in the tech telecom bubble. And the S&P 500 is still just short of its record high, but it is a narrow advance. There are stocks that have not done very well. That's going to always be the case, but it's the number of stocks that are not doing that well here. And the fact that this is such a narrow advance that I think is quite remarkable. It gives slight early 2000 vibes here. What do I mean by that? It could be that we see one last hurrah in the AI hardware market. Hardware trade, a further narrow advance that's quite remarkable, manages to drag the big market cap heavy indices higher to strong record new highs. This is just a scenario, by the way, if we're rhyming with the market back then. But we see the median stock continuing to just sort of lag and to be adrift and go sideways. And then those shift. So we could see the leaders become the laggards. We've seen this at times, basically after the huge momentum runoff, and that's what we're going to see in the next couple of years. And then we're going to see that in the next couple of years. So we're going to see that in the next couple of years. That we saw in the first two quarters of this year, and the likes of the memory names, the hard disk names, et cetera. And then there was a period where these were the weakest stocks. And now some of these are coming back, and the broader hardware space in AI is coming back. So that could be a setup. Who knows? But just for some data on this. So this was circulated in a chat group I'm on, so I haven't checked this data myself. But I think it's good, coming from the source it's coming from. But just with that grain of salt, the idea is, or the data suggests, that we're at 70% fully of S&P 500 stocks. 70% are below their 55-day moving averages. Pretty remarkable when you think about us being here close to the record highs. So the monkey dart, the monkey dart portfolio, the idea that you can just throw the darts at a group of stocks, and this will do as well as the market. Not doing so hot at this point in time. And then I was looking at year-to-date performance for all the S&P 500 components, and fully 175 are either flat or down on the year when you have the overall index up 16.6%. A very strong year indeed for the S&P 500. So just a warning on where this market is at and the narrowness of the advance I think is a bit of a concern here, even if, again, the scenario could be that we had a lot higher still. There was a news item, by the way, maybe of interest for people here in Denmark especially, although the knock-on effects were not really there, neither in Novo, Nordisk, or in Eli Lilly, that Viking Therapeutics, a U.S. company, announcing some interesting, I guess, some kind of, what do they call these? Basically a trial. It's not the latest stage trial. It's some kind of results from some trial of one of its drugs, this GLP-1 candidate they have, their most promising molecule. The stock was up on the order of 50% pre-market. I think at the end of the day, more like in the 30% to 40% up range. But the interesting thing being here with their formulation is they could have a drug that is both good for extraordinary rapid weight loss, but also good for maintenance. So the same drug, where you're taking it less frequently, and they have a pill version of this. So you can just sort of flex on how you take this drug depending on where you are in your sort of weight loss journey, whatever. Anyway, this was seen as quite promising. And if I recall, I actually mentioned this stock some time back as one that Stanley Druckenmiller had loaded up on in one of his 13F filings. So interesting story there. Again, there's a lot of people out there, and this is a crowded space in terms of the coming competition. What is it? Pfizer has this, Metzera, drug. They spent a fortune acquiring that drug. There's a couple other players as well, in addition to Novo and Eli Lilly, the two big market leaders and incumbents really in the space. Yeah, so that's pretty much the market. The broader market, again, SP flat, and the NASDAQ 100 up slightly, and the SOX up 2%. Let's look over macro and FX. So we had yields pretty volatile yesterday. There was this latest news item. It broke, basically, as I was recording the podcast yesterday. If you listened to yesterday's podcast, and we did a little segment sort of trying to break it down in terms of the immediate reaction. And that pretty much sticks. So we don't really know what to do with this. You have Iran talking about being willing to allow Hormuz traffic to proceed smoothly. But at the same time, its demands are the types of demands that the US has rejected before. Trump claiming that there was productive talks, whatever. We just don't have anything to go on. We know that traffic has been quite heavy through the Hormuz Strait, despite all of the headwinds. Saudi has, at least to some degree, restarted its east-west pipeline. But there's just all this stuff afoot with what is the status of the Houthi rebels. The US doesn't want to wait in there. Apparently, this seems to be a shock for Saudi, for obvious reasons, when it's gotten so much support from the US before. And diesel prices are still pinned at the top of the cycle, and even more noise. And Trump supposedly is saying he's the idea of a diesel embargo. And Europe is, the whole world would be, ex-US would be heavily affected by this. The US is a large net exporter. Was it one point? I'm forgetting the numbers. 1.2 million barrels a day of distillates, most of that diesel, something like that. And half a million barrels a day, apparently going to Europe now, far higher than it was, by the way, before the Iran war. So Europe is like, well, thank you very much. You start this war and cut off a key supplier of diesel to us. And then we become, we become, we become, we become, we become more reliant on you. And now you're cutting us off. So directly, this would not be a help. That's around 10% ish, very roughly, rough numbers, the daily demand for diesel in Europe. So it would have severe consequences if the US takes this step. There are a lot of people out there, very skeptical that, that even Trump would go this far. I'll send up, I'll send a couple of links, or at least one link to you in the podcast episode description on the logic here. I mean, it would raise prices. Everyone would raise prices for goods that the US imports. It would, you know, easy to say the allies would be a little bit PO'd. And that's not always something that Trump cares that much about, but this would have severe consequences, but it's also just to put it out there as something that we need to recognize the severity of if it is indeed announced and the severity into particularly Europe among the large liquid markets, but also emerging markets and elsewhere. And with, so back to yields. So we have this, this, you know, Iran talk, yada, yada, the crude oil price goes down a bit more and the market is a bit happy with this. So we saw yields punched a bit lower, but they've sprung right back up. It was just like a bad penny or leavened bread or whatever. They just seemed to spring back up. Kind of interesting that that is the case. You know, the key thing being here is mostly the front end of the yield curve right now. And this is helping the dollar higher because the yield curve is going to be higher. And so, you know, the yield spreads are moving in favor of the US dollar since the FOMC. And we are seeing new dollar highs here. I'll get to that in a second. But you still have that tamed tenure. So it's not really feeding that strongly through into broader risk sentiment. I mean, the S&P 500 equal weight index, the Russell, they look a little bit wobbly here relative, very much so relative to the S&P 500 and the NASDAQ 100. But keep an eye on this this 10-year. Really, it's been pinned under 5%. 5% has been seen as anchoring things. It's been proving a magnet for now. But if we stray above that, and especially if we stray strongly above that with some kind of momentum, I think it really starts to set things on end elsewhere and feeds into more volatility, probably into more dollar strength in the short term. But it also probably encourages some climax in the market volatility on a shorter time frame and some kind of official response at some time. So I would say that the time frame for that volatility event compresses once and if that happens. So for now, we get Eurodollar heading to new lows. It's trading the low 114s now. There's only one last bit of range support left going all the way back to early 2025, this 113.25 zone support. And below that, I've talked about 112 to 112.50 as being key. That was the range, the big breakout range on the way up when we traded all the way up to 120.80 or so before this long and very boring rangy correction sequence we've seen since what was at the end of January of this year. And as noted, the yield spread moving slightly in favor of the dollar there. We are at local lows since I think it's July, early July in the case of the two-year Europe-US spread. If you look over the UK, that spread is actually pinned right on the range lows going quite far back. We have been here before. We have not been much lower than this since I had it on my chart earlier this morning and I don't have it in front of me. Quite some time back, let's put it that way, and quite some time back since it was sustained below current levels. In other words, we've seen a dovish Bank of England relative to the hawkish FOMC that has compressed the yield spreads. If that is the key driver here, you could argue that Sterling, versus the dollar or cable, could be trading as low as 130 or at least the fundamental support for that move is there. I think one reason Sterling has not been wearing this to a worse degree, this yield differential, is that Europe is a little bit more in the negative spotlight because of the sovereign debt spread situation. In other words, that the multiple governments, multiple treasuries, one central bank, awkwardness when you have a stressed bond market like France's is increasingly becoming in that Germany-France yield spread blowing wider to 105 basis points, which is where it closed again yesterday, is a concern. It needs to spike further to become a very significant concern, but it's there as a potential issue. And I think this whole diesel situation is one of those things that could really make things look a little bit uglier for Europe. Although, we get the latest PMIs in for Europe, the flash September PMIs this morning. And the actual numbers look fairly steady above 50, solidly above 50 in the case of Germany. Only very slightly disappointing, 53.8 versus 54.0 expected. And the services, surprisingly, this really picked up. So we're in the low 50s again suddenly from decently below 50 for both France, especially France, but also slightly below 50 for Germany. That ticked up to 52.9. So what that's a measure of services activity, but it's not showing that people are panicking and hiding inside their houses and not consuming. So that was a slight positive surprise, but it wasn't really picked up by the market this morning. All right, I think I'm going to round this off. I've got a couple of interesting links for you and really, really some strongly recommended listening on the one of them here. But just a couple of things, just little angles on things if you want to follow up on it. I saw somebody positioning a U.S. Treasury Secretary Besson's comments on the notorious Hugging Face hacking incident where there's the test of these, by OpenAI, of these bots to find security, what was it, security issues and using all the, using, basically hacking into Hugging Face. All this behavior, by the way, that Cory Doctorow claims based on some links he sends along were basically behaviors that were fully demonstrated in the training data. So this wasn't really that dramatic as it was positioned as being. In any case, Besson's signaling that he thinks, this is OpenAI's problem. And some are arguing that this is signaling that, A, that maybe the OpenAI's and the entropics of the world could, you know, be looking to have all kinds of hacking mischief set loose as a way to get the regulation that they want to protect their business models. And this is Besson's sort of counter signaling, I know that's your own problem, that's on you, and, you know, the public, the public purse is not going to wear the risk. There's that, and then there's this whole notion that Trump is being maneuvered into maximum and sort of high diesel prices by both, maybe by China helping Iran to engineer the situation over there. This is all, smacks a lot, to say the least, of conspiracy theory. But it certainly, I think, speaks to the very ugly instability that continues in the region, and we still don't have any answers. So I'm just, just need to have that geopolitical card or awareness of the geopolitical card that can be played into this market at any point in time. And the market has given it too little respect, I think. So look for that. There's a link, I was talking about must read links. The one you have to listen to is Russell Napier long form podcast. The Peter McCormick show is the one there. I'll make some comments on that and I'll follow up on that in future podcasts. I need to wrap this one out for now. So look for that and other links, again, in the podcast episode description. Be careful out there and I'll be back tomorrow with the next Saxo Market Call. This has been the Saxo Market Call. 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 marketcall at saxobank.com. That's marketcall at saxobank.com. Saxo. Serious trading worldwide. We'll see you next time.