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, 9th of October, 2026. And boy, what a crazy day. Yesterday was an algorithmic wipeout, if you will, I guess, on a single news item. And that was the FT running a story about OpenAI's revenue run rate. I've looked into this. I'm none the wiser on what the actual run rate is. And it's all these murky accounting figures. But basically, I think what the whole experience goes to show us more than any information value, we get in the particulars of trying to figure those things out is the fragility of this market and sort of a fire drill, what may happen if we actually did get a sort of solid evidence of some kind of, and eventually will come, of some kind of slowdown in AI spending and a key actor or somebody showing signs of trouble. In the meantime, there's a lot of trouble in brewing in little pockets here and there with credit conditions for, well, just credit conditions are under pressure. Let's put it that way. I've got a couple of examples. So, yeah, I mean, what do we see? We see this OpenAI story coming out. And it's affecting everything. NASDAQ futures were down the order of 400 points in very quick order on the story, even feeding into things like the global bond market. I mean, German interest rates. Are we supposed to be playing German interest rates on what OpenAI says about the revenue run rate? It's just a remarkable reaction function across global markets once again. So, I think, yes. I think the lesson is basically market fragility, the dangers of these algorithms, maybe a little test drive for what the scale of the move would be if it was something that had a bit more meat on it in terms of the actual story. And then the conspiracy theorists will be out there saying that, and I'm not sure it's a conspiracy 100%, that there's so many players in this market that must keep together the story that demand is continuing to stay strong and is only going to rise for now. Because, of course, just like those actors. At one point, many of them cynical. Back in the U.S. housing crisis, it was always about keeping the flow going at maximum speed, ninja loans, et cetera, to get as many of those loans approved and those fees reaped before the whole thing came crashing down. It's not probably that obvious a setup this time around. But I think structurally that might be what we are looking at here. At least that is the bare case for what the conspiracy theorists would say. And, again, I think there are shades of truth within that in the circular financing of key players, et cetera. So let's look at what we have here. We have NASDAQ down 1.3, almost 1.4%. The SOX was off 3.4% yesterday. Again, we've kind of come back. We came back a little bit already before it closed yesterday. And we've come back in terms of the NASDAQ futures all the way back to the point when this FT story dropped. Got to wonder. Got to wonder. I don't know who the FT reporter was. But if I was an editor-in-chief, the power to move markets here, and I don't know if there's any risk of legal liability. But, my goodness, this is big stuff when you're moving the markets by this amount. Of course, if the story was based on facts, that's one thing. And maybe it was based on facts from one point of view. But I think the whole experience, once again, it just shows how murky some of these figures coming out are. What is the reality? It's so difficult when we don't have these companies trading in public markets. And even when they are, we're not sure that we're getting. Particularly good numbers. Some of the recent link I sent along to Kakashi's materials, for example, talking about how NVIDIA aggressively reports its revenue and putting some question marks around that. It's paid for research. I don't want to quote extensively from it. But it's one negative take on what NVIDIA is doing and its participation in ensuring the growth is continuing. And there are others saying something similar. So we're full circle now from this story. We had those leading sectors doing poorly in tech, et cetera, yesterday. But we had the median stock was quite solidly up on the day. I think, once again, our divergence is resurfacing there. The S&P 500 equal weight up 0.6% on the session. And let's see. Digging into a couple of single stock stories. I think the most interesting one. Well, here it's not even a – well, this is a single stock. SoftBank is out attempting to – raise $100 billion from Middle East sources for new investments linked to AI. Just, I mean, you know, the circus continues with this capital expenditure or attempts to keep the capital expenditure beast fed. And then this is a different area. SpaceX announcing an $8 billion acquisition of some key bandwidth. So we're right around this 800 megahertz area, which is useful for basic mobile telephony services. And this would be competing. And my understanding is they would essentially be doing this fully from space with their future satellites. And they've gotten approval, supposedly, for 15,000 additional satellites, I think, linked to specifically mobile telephony. Not even necessarily the Starlink area satellites, but ones that would be specifically able to communicate with standard handsets, which Starlink does not do because they have this new bandwidth. And this is putting them directly head-to-head. And this is putting them directly head-to-head against legacy – or incumbent players in the space. So Verizon, AT&T, and US T-Mobile all down on the order of 5.6%. Last I looked, at least, for Verizon and over 6% for AT&T and T-Mobile US. So this is an interesting new area that they're rushing into. And incumbent players are seeing some serious pressure here. And then I just wanted to briefly mention – I mentioned a little bit there on the pressure in global finance. Financial conditions from rising yields. We did see yields coming back in yesterday. In part, we had a really solid 10-year yield. I neglected to mention that in yesterday's podcast on Wednesday already. And that helped to reverse the yields rising at the time there. And it was part of this open AI story that saw treasuries rallying. But they haven't really given up their gains that much, as much as, for example, the NASDAQ 100 futures have. And we saw a decent 30-year auction, solid bidding metrics, not quite as strong. And we saw 30-year yields coming back in as well. So we've seen the 10-year, for example, as high as 5.35% yesterday, almost challenging those multi-decade highs. And then it came back in about 13 basis points on the close. And it's backing up a little bit once again here in Europe today as risk sentiment continues to recover. But that one's worth tracking, of course. But some stress in the dodgiest ends of the credit space. The high yield spread indicator yesterday widening a bit more. It's still not quite back to the cycle highs, but not that far from them. Here are the ones since there was a little brief March timeframe spike on the outbreak of the Iran war. We're not quite back to there by any means just yet. But we have – I'm curious just to track a single name here just because it's one of the more vulnerable names and because it was such a massive financing deal. And that's around Skydance. So, of course, this paramount global acquisition of Warner Brothers, Discovery, and the new parent company. The company being called Skydance. And you've seen a setup here. So they've sort of shoved a whole bunch of new debt on top of with higher seniority than the old paramount global debt. So those holders of paramount global debt are not terribly pleased to say the least. They've seen their holdings marked down around 10%, 15% by the market in terms of the value, market value right now if they were to sell those bonds. And so the paramount global, the CDS price, so the cost to insure these bonds has gone up to like 500 basis points a year or so. Essentially from around 280 before this deal was announced. And those 2036 bonds are yielding 11%, assuming they ever reach it, to maturity. A very high likelihood there priced in of default. And even the higher seniority debt, so not the top one, but the second lien debt, a similar 2036 bond is trading close to 10%. This is the more senior Skydance, actual Skydance labeled bonds that were used to help finance this deal. So very interesting to watch. Can this – The story pan out for those that did the acquisition at such a high cost. Can they get the profits in there and the efficiencies realized to get this one through the storm of financial pressure? Super interesting story there. And SpaceX, just for perspective, so 500 basis points on the paramount global CDS prices. SpaceX itself, it's been doing a lot of debt financing as well. 202 basis points now on that one. Not necessarily a distressed level, but it's risen a lot in recent weeks. Yesterday we also had the Germany-France yield spread. Kind of going back in the wrong direction. It stabilized a bit. It's a little bit lower this morning. At least last I looked, it was Germany-France. 10-year spread was around 137 basis points. I haven't seen any new news items. I haven't looked much either because it hasn't been doing much. But there's that. But there's also the note that France is having – has a huge amount of debt to roll next year. A lot of it, this COVID-era debt that is coming due and needs to be rolled at, of course, much higher interest rates. And that's adding to the debt service dynamics that they're feeding. the whole issue in general there we had a slightly weaker The yen overnight, despite the drop back in long yields, I think some of this driven by the news that this bill to cut taxes on food and drink from 8% all the way down to 1%. Listen to that, Denmark, when you're taxing this stuff at 25%. That plan, of course, is costly on the revenue side, fiscal dynamics concerns, yada, yada, as well as some kind of cash benefits to the lowest earners. I didn't see the estimates on the GDP of this, but directionally, it's the wrong thing, of course, relative to fiscal stability. And I think this might be why the yen was a bit weaker overnight. It's not fully approved. It was just the cabinet that approved it. And this goes on to the lower house there that would have to send this through. But given Takeichi's very strong success in the election and strong majority, an absolute majority in the diet, I think that's what they call it in the English press, English language press. Of course. With the lower house, legislative house, I assume that goes through. Looking forward on the macro front to data today, we do have this Michigan survey. Let's recall that we saw another dip last month, not quite as extreme as the one in the conference board, consumer confidence indicator that really surprised with the big move lower. But we're getting close to these worst ever levels again on expectations for the Michigan survey with the complication that the switch is too. An online survey in 2024 from the prior survey via telephone has sort of changed or altered the ability to compare these numbers from prior years. But it is what it is. Directionally, it is, of course, important. All right. And we are about to hit earnings season in a big way next week, Tuesday, Wednesday, Thursday. A lot of big names reporting, starting as usual with the big financials, J.P. Morgan, Goldman Sachs, Wells Fargo, and Citi all reporting on Tuesday. And then we'll see what happens next week. And we also have Johnson & Johnson and UnitedHealth, two big companies there. Wednesday, the more tech feel there with ASML. Of course, the Dutch lithography and etching company has a monopoly on that highest end equipment. It's very important for the whole AI hardware space, AI hardware story. They report on Wednesday. And then we have Bank of America, Morgan Stanley, and BlackRock also on Wednesday. Thursday, and I apologize, yesterday I indicated that TSMC was out with earnings. They were out with their Q3 sales revenue yesterday, which is problematic. Probably a lot of the impact of what next week's earnings report will actually deliver. But apologies for stating it was their earnings. It was just their revenue report. Their full earnings report is up on Thursday next week together with some other smaller, less interesting companies. So, yeah, super interesting with this full circle moment, this sort of weird sense that how quickly the music stops when you get simply an FT article about non-publicly available data and the reporting around that, the scale of the reaction. It's pretty scary. The bullish view would be, of course, hey, look how quickly the market snapped back from this. It just shows how hungry people are to buy the dip. Maybe that's the right view. I don't know. To me, it just looks like a bit of craziness, really, at the end of the day. Okay, so on to a couple of links in today's podcast episode description. That's where you can find them. I need to put something in positive on all this AI stuff. I'm always playing the skeptical card, and I've got some more skeptical stuff to counterbalance that. But there was some Monetary Matters podcast. I haven't touted anything they've done in a while. They have a guest. I haven't even seen it, but he's saying that, look, NVIDIA is absurdly cheap, and this is going to be a ripping market. Who knows? But we need to listen to more than one point of view, so I'll just put a link to that one. And then there's a two-part interview that Ed – I don't know how you say his last name, actually. Zitron or Zitron did with Monetary Matters. And another one, in case it's a little bit less specific, over on a different podcast. And I was listening to the very beginning of this where he was riffing on what the implication and meaning of this Amazon leaseback is of these $8 billion worth of NVIDIA chips. Of course, his take is this is a sign of negativity. So you might enjoy a positive and a negative view and see whether it can bounce out in your head. I think – I know that I'm extremely skeptical, but I'm often that way. So I know myself enough to know that my view could prove the wrong one. Just my experience with AI is it's profound – well, profound productivity for many tasks and ways that it could increase productivity over time. So, of course, there are massive things that AI is going to realize, but I also wonder if it's being oversold at the same time. Just – I don't know where I am. But the key thing is for the near term, of course, for markets, and that's what we're most interested in here, is the degree to which the scale of the capex continues and continues to grow and whether somebody is realizing they need profits to continue to drive that spend. In the meantime, leveraging, leveraging up and financial conditions are tightening. So this is very interesting. Well, I don't know if we're at a pivot point, but at some point, we're going to be at this pivot point where those two – Collide, you would think. So I've got another couple of links for you. There was a failed GRU attack of a Ukrainian aircraft at a German airport. This is an aircraft that was full of ammunition. So luckily, that attack failed because you would have had a plane full of ammunition exploding on the runway had it been successful potentially. But the accusation that there are actual operatives on the ground from Russia in Germany is quite an eye-opener. And you wonder – there's all these talks of hybrid attacks. And things like that. But what will the European response continue to be with this proxy war in Ukraine versus Russia? Another one is Burnham and this whole Man City fiasco and just this situation where you have Burnham, a prime minister who was the mayor of the Manchester district or area of, I guess, greater Manchester. And, of course, his city enjoyed vast amounts of investment from the same authorities that own Man City, the football club. And now this football club has been accused of all manner of malfeasance. And what will the penalty be? And he made some recent comments that downplayed this. Some are saying it could cost him his office. I don't know. Just some reading up on that for those that are not familiar with the situation. Okay. That does it for today. Super interesting. Now we've sort of come full circle from this weird exercise. What today brings. We'll find out. And, of course, have a great weekend when you get there. And we'll be back next week. 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 marketcallatsaxobank.com. That's marketcallatsaxobank.com. Saxo. Serious trading worldwide. We'll see you next week.
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