AI theme reheating as Trump coalition fragility a rising talking point
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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.

All right, welcome to the Saxo Market Call. It is Wednesday, 11th of June, 2025, and we have a market still in a very good mood. New highs locally here in the major U.S. indices. The mood in Europe is a little bit more subdued. Perhaps the FT discussion that France, feeling it does not have the budget room to invest in

in defense to the degree that it would like to, and the big decline in defense names might be hitting certainly one of the better performing sectors in recent memory in Europe. I think it was an interesting story.

And an interesting question mark around the ability for Europe to do fiscal more broadly. Certainly France specifically with its debt levels is the problem child in the European context and Germany having to do the heavy lifting. Some positive risk sentiment as well from the U.S.-China agreement agreement.

the London talks wrapping up and these talks, let's remind ourselves are not, don't look particularly profound in terms of what's going on or what's being agreed. It's more about getting back in touch about what was agreed. It appears in Geneva and being able to move forward with, uh,

what is the lay of the land on these rare earths, and did the Chinese side extract some concessions? Pretty sparse on the details there, but nothing at least near term to sort of ruffle feathers or cause concerns for risk sentiment more broadly. We are seeing some pretty hot action in sort of AI-related names. Intel had a massive day yesterday. I think it was up more than 8%.

Uh, it's helping to, to build some supercomputer, uh, in, in London. I just a bit sketchy on the specific news around that. I'm wondering if there's some kind of, uh, accumulation going on there by some bigger hands. Uh, but, um,

Intel, one of the top performers among large cap stocks. NVIDIA doing as well and getting back towards those all-time highs. If you look at MAG7, so you have sort of a divide between the Microsofts of the world, which is hitting all-time highs, Meta, which is charging hard. There is the announcement of a new AI super team being formed under the direct supervision of Mark Zuckerberg.

So that's good news for all AI-related investments when you have this ongoing focus from the likes of these very, very deep-pocketed companies continuing their barrage of

investments in the space. Meta as well announcing a $15 billion investment in Scale AI, a privately held company. And then sort of back to the Mag7 story. So Microsoft, NVIDIA, Meta doing quite well. Amazon a little bit in between, of course, on the comeback trail still, but still reasonably far below its all-time highs. Whereas the laggards have been Google,

And especially Apple struggling with its AI story there and as well, I think, sitting in an awkward place with the Trump focus on where it produces its phones. And Tesla somewhere in between as well, you know, been pumping back and forth on the political angle there since Trump was elected. Now, also specifically on Tesla, the robo-taxi was meant to go live, I believe it was tomorrow, but it's been delayed 10 days until June 22nd.

I wonder if it gets delayed further. I mean, we have to realize this would be driverless cars operating on the city streets in Austin. Apparently, it's set to be launched with 10 to 20 cars. Let's see if that happens. And other specific company news, Disney hitting some key resistance areas and doing quite well. It announced that it is acquiring the rest of streaming service Hulu.

All right, looking more broadly, speaking here. Oh, and by the way, one more note on the AI and maybe to emphasize what's going on here and the potential disruptiveness from it. FTE with a story on WPP, which I think is an ad agency, discussing a sort of a redo of a Super Bowl. So the U.S. Super Bowl is, of course, the sporting event of the year.

The most expensive 30-second commercials in the world are launched during that. Some company wanted a redo of their advert. And rather than spending the millions of dollars to do a physical reshoot of this with all the usual crews required, it was done entirely with AI tools. So you have to imagine what that means in terms of the disruptive impact, the deflationary impact of such a productivity increase if whole companies

swathes of physical people and facilities do not have to be used in shooting something like this. And this, I only scanned the story. I didn't go into full depth, but it's just remarkable that something as full video quality could be produced using AI tools only. All right. And then I think, of course, we have a really critical release today. The USCPI

I actually read in depth – I discussed a John Authors column, a recent column, questioning whether the tariff impact could be seen soon in some of the inflation numbers. The actual Bloomberg call is actually that we could see a slightly soft print today relative to that 0.2 month-on-month increase on the headline and 0.3 percent increase on the core. They think that discretionary services are coming in so quickly.

So low and actually deflationary impact there could overwhelm anything else. Things like hotel bookings and airfare are coming off. So an interesting release nonetheless with those U.S. long yields poised at that key 4.5% level on the 10-year. And by the way, we have a 10-year auction later today as well. A key point there. And then the 30-year tomorrow with that 30-year rate hovering near 5%.

If we do get a hot number, does this start to stress the treasury market? How would the broader market read this? Would it be triggering some sort of risk off?

We'll have to see. I think on a soft number, the reaction function could be a bit more straightforward, especially into FX, where it seems like if you got a decent rate reaction, longer yields coming down a bit. This 145 area in dollar-yen, which has been tested with a weak yen of late. We've seen euro-yen, for example, hitting new highs for the year since yesterday.

uh, it would be yen bullish of course, to see yields coming back in sharply lower. So I think a lot riding, uh, directionally speaking for some trades that have been, uh, or trying to figure out the status of them, uh, lately and gold as well, likely reactive. Uh, so, so weak numbers and treasuries are strongly bid. We might see a little bit of a correction in gold, whereas, uh, anything that stresses yields higher, I think sets up a, uh,

uh, sets up a, uh, you know, follow through rally in gold because the idea would be that, well, the U S treasury can't have these higher yields and will therefore be looking to launch, uh, and leverage this next or mobilize this next tools to bring liquidity to the market. And that is gold bullish. I think you can, you can kind of conjure up a gold bullish, um, scenario almost regardless, but, um,

I suppose the stress on the treasury market is, is the more obviously gold bullish scenario. And then finally, I will exit this podcast with the discussion discussion I've briefly mentioned, and I will follow up more on. And I think is, is, um,

perhaps becoming more dramatic here, and that is the risk of sort of fractures in MAGA land and Trump land. Not just the Musk-Trump feud we've seen, but there are a number of moving parts here that Trump needs to address.

to successfully rule the country or govern the country. Those include on the judicial side. So in his first term, he got this so-called Federalist Society on his side, a group of very conservative judges. And a lot of these people are the ones that are blocking his executive authority right now. And he's actually been specifically railing against them

When he was the one that appointed them because he said he was poorly advised, he probably had no clue, obviously. Why would you have a sophisticated clue about the judicial system when you're a real estate magnate and a political novice? So very interesting tension there. As well, I've talked about the big, beautiful bill and the danger of its impact.

being reassessed by various corners if it is playing poorly to the public. And in general, you know, one clever – I'll pass along the link to this, but one clever commentator here saying that there's not really any good popular mandate for these traders. Like who is the big popular –

what supportive corner of Trumpland is arguing for these tariffs. Maybe in a general sense, if the idea is it protects workers, but you even have the people on the Small Business Administration

or small business owners mobilizing to protest what is going on because it's affecting their business. And then finally on this Trump fracture point is the LA, well, some people will call them demonstrations, others will call them riots. How does this play for the general public? Is it something that actually feeds support for Trump because it is seen as law and order or does it play poorly because it's seen as an unnecessary force

or excessive overreach against people that have been in the country for a long time in the case of these ICE raids, et cetera. So I just – I think there's something bubbling here. Is Trump in an overreach situation thinking that his support is far more profound than it actually is? And therefore, what are the consequences? And the first order of consequence could be that this big, beautiful bill is in danger and it threatens those tax cuts.

possibly, or at least some of the spending cuts or some combination of the two and creates more fiscal drag, which would then aggravate the risk perhaps of these softening U.S. numbers becoming softer still and the recession trajectory possibly looking a little bit worse if this is something that is building. So we need to keep our eyes on this, I think, quite closely and we'll do so.

And then I'll actually delete one more thing. I just want to mention that platinum just continues to explode. We've had Ola on the podcast covering that. All the way up at 1274 now. I think he said it was up 40% on the year. And the next target area is a decade high there at 1340. It suddenly doesn't look that far away after it was trading sub-1000 before this rally began.

All right. I'll call it a day for today. We will be back again tomorrow with the Saxo. Mark a call.