News

Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.

Today’s Links

My FX Update from today - previewing the five central bank meetings incoming this week and whether the US dollar breaking down - it is already, but will the FOMC meeting cement this? Also, is USDJPY a floating peg or can it break this unbelievably sticky range by the end of this week?

The Breaking Points podcast - I like to listen to them on occasion on some issues even if I find they miss the mark on more in-depth topics, especially economy-related. In this case the initial part of the podcast framing the Charlie Kirk assassination and the “meme-ification of reality” is a compelling one, together with the intellectual honesty and humility of not wanting to take their conclusions too far until more is known

X thread from Kerrisdale Capital talking up their short case for Coreweave as a company that is engaging in “value destruction dressed up as expansion”. Yikes! There is also a full 30-page PDF if you care to get into the weeds.

Chart of the Day - Saxo Global Risk Indicator

The Saxo Global Risk Indicator measures volatility across a number of asset classes, from the VIX to corporate and sovereign credit spreads and others. It has a spotty record in terms of showing predictive power, especially in terms of the timing of what will come next. Arguably, there were profound signs of strong divergence into the late 2021 market highs, when the Indicator was showing lower highs while the S&P 500 peaked. AT the late 2022 bottom, the “bullish divergence” was muddled. Later, in mid-2023, the two data series look fully in synch. Then came the very drawn out bearish divergence into the market top in the summer of 2024 before the JPY carry trade meltdown, followed by zero warning ahead of the meltdown on Trump’s trade policies spooking the market ahead of the April climax low. Recently, a minor bearish divergence has developed, as we have new market highs with the Risk Indicator failing to match its recent highs. As the indicator is measured as the standard deviation relative to a moving average. There is a natural “ceiling” in low volatility environments, while the risk-off events achieve asymmetric negative readings - appropriately reflecting the scale of vol spikes.

Questions and comments, please!

Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.

Today's links

My FX Update from earlier today - was written before the BoJ was out this morning indicating more interest in hiking rates “this year” - the story was also out as we were recording today’s podcast.

On the AI bubble watch, there is a well-written article in The Atlantic questioning whether AI drives productivity gains and is anywhere near ready for prime time when it actually decreases productivity in the area where it is most meant to improve it (programming). Must read.

The Politico coverage of the new National Defense Strategy that supposedly will put US self reliance and protecting the homeland and the “Western hemisphere” at the top of the agenda over confronting or rivalling China and Russia.

The story that ASML is investing big in French AI outfit Mistral and one stab at some of the intriguing possible reasons it is doing so.

The New York Times Ezra Klein on Trump’s authoritarian consolidation phase and whether the Democrats will or should put up a stand by shutting down the government rather than continuing to allow it to be funded.

A thread on X covering the abominable US crackdown on the South Korean workers in the US to build a Hyundai factory. You can almost hear US soft power evaporating on stories like this.

Chart of the Day - The Nasdaq 100 index

The last two days created a harami formation as noted in today’s illustration above - the S&P 500 index formation was actually far better, but I don’t have a subscription to the S&P 500 index to display it. Supposedly, this could be bearish for at least a brief time period ahead. I suspect we may need a catalyst to counter the upward drift. I have outlined other bearish and one bullish harami formations from the recent past on the chart as well. Four of the five were “successful” if in some cases very modestly so.

Questions and comments, please!