Silver rips as Musk-Trump bromance trips
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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. It is Friday, 6th of June, 2025. Lots of entertainment as well as a financial market action yesterday with the crazy Trump-Musk feud getting to the level of Musk accusing basically indirectly of Trump somehow being corrupt.

associated with Epstein and the Epstein files, and that's the reason they haven't been released. It all went back and forth in a pretty interesting fashion. And yeah, the final result was something about Musk saying maybe it's time for a cooling off period. The important thing for markets, though, was how much was the Tesla, this TIF and this Tesla meltdown we saw, minus 14% yesterday at some $140, $150 billion, and market cap destroyed.

on his clearly going all in against Trump and especially on the bill, the big beautiful bill, so-called. How much is that reflected in the broader market results? We saw a lot of associated things with Tesla. Palantir is off minus 7.6%. I really think there's a strong sort of speculative cluster of stocks there that are owned by the same people. Likewise, crypto was off quite heavily. It's bounced back a bit.

But yeah, and of course, the broader NASDAQ was also off a little bit. And we put a chart of that on slide two in the slide deck today.

Another ugly candlestick. The last time we saw a sell-off of similar nature, what is that, a week ago or a little bit more, I thought, okay, this is a sign that new high being rejected there, a sign we could be into consolidation mode. That was promptly rejected within a day or two. I still just would, just from a technical point of view, think that this is a little bit ugly. We've got that big gap that's still there, back down on the NASDAQ at least, down towards the...

The level is just above 20,000. Or you could argue it's the 200-day moving average. Either way...

um interesting to see how how we uh absorb today's uh jobs report and also forget the 6000 level in the SMP John uh we yeah it's a psychological level we've been hitting our head against that now for a few times I think actually just kissed it again yesterday so um that is a key level into this job report today exactly uh so yeah uh long story short you can see the rundown of of news items there on equities

New highs rejected. The Tesla news, not good for sentiment in the big speculative space there. Rates, a bit interesting there. We saw European rates jumping. The ECB guiding that this could be the – we're getting to the end of the rate cut cycle. The market taking this as meaning that, okay, the next cut is going to be the last one in all likelihood. We saw short rates backing up several basis points.

A bit of a surprise there. I was also a little bit surprised that they would want to start signaling this. It's not like the market needs this signal, but maybe it's because I feel like they want to send it the signal that this is the last one for now until further notice or until something else happens at the next meeting or the next time that they do cut. They didn't want to be all at once the reaction.

U.S. yields, however, some negative jobs data out or jobless claims data out yesterday. And this is the first time on this jobless claims data, this weekly one, that we've seen two prints in a row that were bad. All the other spikes have been

Generally a one-off, especially that it came in at 247 versus the 240 last week. Got the markets on edge. We saw yields cratering to new lows since early May, but then a little bit of a rebound. So is that because today's jobs report is the only single data point to rule them all, or is that a sign of something? A bit hard to tell.

On trade, we have Trump and Xi with a long phone call, supposedly positive. Supposedly, we're heading towards some new rounds of talks. And even Xi apparently inviting Trump to China and Trump likewise inviting Xi to the White House suggests to me that we're going to see some kind of quite extended timeline on all of these trade negotiations. It's going to be a hard time to get that all in-house by this 90-day deadline, which will be into early July, if we have to wait for

various trips, etc. And then as well, on the note yesterday on the key things that are hitting this market and affecting uncertainty, the big beautiful bill or the big bad bill or whatever you want to call it is, quote, losing momentum in the Senate, unquote, according to a Hill headline. A lot of senators stumbling over key things there. It might end up being a lighter weight package, but I just don't think that anything will be passed that will significantly reduce the budget deficit. So

Not sure whether we can extend the drama out, but I think the end result, I'd be surprised if there is a major reduction in what have been these very large deficits for many years. Then a sign, I think somebody pointing out, I think it was maybe Michael Every in his report, somebody with...

And an indication that there's a split on the Trump team on these negotiations and that they were even arguing amongst themselves right in front of the Japanese trade delegation. So it seems to be a bit of a shambolic process in general.

Now, Ula, I saved the best for last because while foreign exchange is a bit of a mess as per usual, EURUSD tried to get all excited about the ECB news, almost tickled 115. He moved there. Did it pull back just because, well, we have to wait for the U.S. jobs data and we don't want to stick a big move here? I don't know. We'll find out today.

But that was not the case in metals, where we just saw silver tearing through resistance in a massive move, I think an overdue move in some ways. But tell us about what you're seeing that triggered that, and what do you think it means and where it's going? Well, I think you just have to look at one of the other metals, some kind of semi-industrious metals and investment metals, platinum. Both silver and platinum, as we record this, are up there.

around 10% on the week. Gold is up around 2%. And it just highlights the shift we're seeing recently that with gold showing signs of stalling simply in need of additional input in order to justify a further advance here

given the strong rally we've seen already and also just some signs that central bank demand may just be a little bit softening here in the short term. Central bank just needs to get used to these new higher levels, I believe, before we potentially could see a push up. And also some of the

some of the talk on the trade front that perhaps just lower the appetite for now. But that has basically left the market or the playing field straight right open for silver and platinum for several reasons. First of all, they are just like gold. It's a tangible asset.

With all the debt concerns we have, investors are probably looking for – it would be a good idea for investors to look at diversification, having some tangible assets in their portfolio as a rainy day hedge. Gold has obviously been the go-to metal for several years here, supported by the central bank demand. But –

But looking at slide seven, we can just see how relative cheap both silver and platinum has become, both on a relative basis, but also on an absolute basis. And as you mentioned, John, silver was the trigger was really that 35 level yesterday when we took that out. And

This was a classic hedge fund momentum driven run up. We took out a previous high and the first thing you do is you shoot and then you ask questions later. And now the questions that will be asked in the coming days is whether that rally can be sustained. So 35 is now a key level of support.

The same thing happened in platinum. We had a relatively shallow correction following that big run-up in the previous week. And yesterday we raised higher once again, hitting the highest level since 2022. Still plenty of room if that is expected.

if that rally can be maintained. But it is the investor appetite for tangible assets, I would say, that now has put the spotlight on silver and platinum, given the stalling we're seeing in gold. Could you say that based on the size of the silver market relative to gold, I actually have no notion of what that size is. I know we try to calculate the total value of all gold that is above ground, a lot of it in jewelry, but not necessarily in bullion.

at something like worth 22 trillion US dollars if we did our maths correctly. Actually, no idea how much in silver, but just in relative value terms and in relative availability of the metal. Platinum is very interesting to me because

It's just such a teensy-tiny space. If some sort of new shift in demand, obviously the jewelry can suddenly become a demand component there that is far, far larger. The industrial stuff is the risk. The long-term risk there is on those catalytic converters that are used in ICE engines to clean the exhaust coming out of the engine. Obviously, if we're all going all EV in 30, 40, 50 years, that entirely disappears. I'm sure there are other industrial uses of platinum, but...

but it's just fascinating to me

the size of these markets and the degree to which if that speculative focus suddenly rotates in, that's when you get the much bigger moves in percentage terms than you can see in gold. Exactly. That's why Bitcoin is trading above 100,000. I still don't know what to use it for, but it's tight supply and it's basically the expectation that someone is prepared to pay a higher price tomorrow than you pay today. And when it comes to these metals, we are the...

both platinum and silver are forecast to show a supply deficit again this year. That basically means that if you are not getting enough silver and platinum out of the ground, then you are eating into above-ground availability. And obviously that will deplete inventories, and that over time will help underpin prices, I would say especially for something like platinum. And the big joke here is obviously that –

it's relatively easy to forecast industrial demand, which both of these metals depend on quite strongly. What we don't know is the financial demand from financial investors. And that's really where what we're seeing right now could make it quite interesting. Because if we start to see

increased flow into ETFs, which is backed by physical metal, then obviously that will help tighten the market even further. And that could bring forward that inflection point. So this is now really in the hand of the global investor, whether the appetite is strong enough to continue to remove metal from the market.

Me trying to be as quick as possible, I said I can't just sit there and say, well, I don't know. So I just looked on Google. And according to at least one source here, it says something like –

1.7 million metric tons of silver has been, I don't know what they mean by discovered, but if that is the case, that's still less than $2 trillion US dollars, so one-tenth the size of gold. Plus, some silver actually gets more or less consumed in some industrial processes, so the ability to increase the supply is a little bit of a different ballgame, whereas all gold essentially just sticks around unless somebody loses it and buries it in the ground. Yeah.

And just one final point as well. We have to remember, just look back to 2011 when silver hit $50. Actually, not saying that's going to happen again by far because it was a different time and different mechanics. But back then when silver broke $35, it only took eight weeks to reach $50. So that was just a phenomenal run-up. But back then, we saw a weaker dollar. We saw very strong gold. We saw stronger industrial metals. And we're seeing –

similar developments this time around but I think also in the years that's gone past the market has become so much bigger and deeper so moving a market at that kind of pace is close to impossible simply because there will always be two-way interest in these markets.

All right, let's rewind a little bit. We've got some more on commodities in a second, but I just want to rewind a bit to go through the usual slide deck order. On slide three, the earnings coming up, and it's really not many names at all of size. They're reporting next week where I've got the highlights here. Last night, we had Broadcom out. Disappointing on the forecast front. This is a bit of a concern. This is an AI. There's a lot of AI angle with Broadcom. The stock was off 4% after the close.

Lululemon, a very specific play there, obviously, but it was a very ugly earnings report off 22% post the close. And then next week, as noted, Oracle and Adobe, so two very, very large names. Oracle also trying to go all in on AI. Really stunning when you look back at the actual results they've been delivering.

how much the stock has been boosted in recent years. And a little bit of a concern, I would say, that it has failed to climb the ladder of worry as much as many of its peers, at least in relative terms to where it is now versus its peak. In Oracle's case, that peak came earlier, and it was more towards the tail end of last year. So that might be a pivotal report there for Oracle. Adobe has been in a world of hurt in relative terms as well. For a bit longer term,

As its growth has downshifted in recent years, and then some of the generative AI hopes around Adobe have not really panned out. So that is a big company, though, and very interesting to see what they report. And then again, on the FX front, I just put in a Eurodollar chart on slide four. Really frustrating for the Eurodollar bulls we saw yesterday.

Just, you know, we're not hitting on all cylinders on the thing that would support your dollar going higher yesterday. And indeed, it touched almost touched 115 with that week. U.S. jobless claims crushing U.S. yields, although that yield move didn't really hold very well at all and actually resulted in yields higher by the end of the close. And then the hawkish ECB.

In general FX developments, you can see the FX aboard trend signals, and there's just really nothing showing on the positive side really across the board in G10. The dollar weakness is still there. Yen is not having much of a time of it.

There's a big Treasury report, the semi-annual one. I think I'll talk about that on a future podcast. It was out. I'm not sure if it was much of a catalyst short term for foreign exchange traders, but sort of upping the pressure, I think, going forward because it sounds like from this semi-annual report that they want to get tougher if they do find that a country has been violating the principles of currency manipulation.

And then do have a look at your – actually, we'll get back to you, Ole, because you've got another couple of slides or at least one slide there on where we are across the board in commodities this week. Yeah, I think it's worth just pointing out that we are heading for the best week since January. We are up more than 3% on the week.

more than 6% on the year and that beats both the Nasdaq and the S&P in terms of return. So it just highlights the, despite all the economic difficulties that we are currently facing and uncertainties, that commodities continue to attract some demand. Even this week where we saw energy

Energy prices rise quite strongly. Even though we've seen this announcement from OPEC+, they will continue to increase production. So it just also highlights that the oil market is also finding some new friends, probably some of that driven by short coverings. But generally, as you can see, the metals base is just really a phenomenal performance right now, but with the year-to-date performance in silver and platinum catching up with gold.

All right. And then did you finish off on the metals or did you also want to mention how copper? Yeah, finally, just on copper, it's still a very difficult market to trade simply because part of the trading activity is really trying to work out what the level of tariffs will be on U.S. imports of copper. We saw this earlier this week that the tariff on aluminum and steel was doubled to 50 percent. So that's

send a bit of a shiver through the market, keeping the New York high-grade copper price elevated. But also what we're seeing on these charts here on slide 8 is that the inventory levels continue to come down. And what is the worrying bit from the global perspective is the fact that it's coming down, but it's coming down due to a big reduction both in London and Shanghai. London is down 50% in terms of exchange-monitored stocks so far this year.

And that basically means that the COMIC stocks, once the tariffs are introduced, they will not come back into the global market. They will be held within the U.S. and consumed whenever. So this is pointing towards some tightness in the copper market, which is overall helping to underpin prices. Yeah, and that's key for silver. At least the copper is not dumping lower, at least as a component of getting silver to stay above the 35 level and continue to show that something is afoot here.

All right. Cool. Thanks a lot. I'll round it out with the calendar and a couple of must listens in this case, mostly on the appendix of some follow up podcast and other things to do here. On the macro, we have, of course, the U.S. jobs report up today.

There's a lot of anticipation around this, and obviously the lean has gotten negative now after the – there's almost all negative data on the U.S. labor market this week, save for that JOLT survey, which we don't like anyway. It's too old, and it's low-quality data.

So the expectations theoretically at plus 126, I would suggest were considerably lower than that after some of these weak releases this week. And most of you are probably listening to this after the job report anyway, so I won't spend too much time on it. But I would suggest that anything below – well below 100 is of concern. I think maybe around 100 or slightly below is where the expectation really is now.

or would constitute a non-surprise at least. If we start getting below 50 and getting close to zero, I think that's quite negative. And anything below zero would be very negative. And especially if that combines with an unemployment jump to 4.4%, it would be almost a disaster for

But I think the 4.3% would be less of a surprise. Supposedly, the consensus expectation is on the unemployment rate at 4.2. But there's a lean for 4.3, I would argue, given the other week data this week. So it would require really a 4.4 for a proper negative surprise and combined with a payrolls data that is close to zero and worst case below zero.

Next week, we have a few things up, as you can see there. I think the main one being the US CPI up on Wednesday. And then these Thursday jobless claims releases are going to be getting a lot of play after we have two in a row as sort of the high frequency indicator of note. And then finally, to close things out, do have a look at slide 10, where I've got three interesting podcast listens for you. I think all of them for very different reasons.

we had the latest in Grant Williams and Dimitri Kofinas is a hundred year pivot, uh, podcast series, or at least the availability of is, is, is now there with Charles Calamiris, uh, a very good conversation. And, um,

Great listen on this new era of fiscal dominance and what it means. A reminder to follow Michael Every. He's always coming up with these deep reads across the board on headlines, and he just comes up with all kinds of interesting geopolitical tidbits every single day. So just that's a great follow on X for his daily updates. And then I think one of the better ones I've heard just for

perspective and challenging a lot of the consensus out there is Mike Green, who was a guest on Macro Voices, not this week, but last week.

Have a listen to that one. Talks about all things passive and some incredible figures he comes up with on how passive flows affect market cap valuations and are such a key driver for this market. And it really is all about flow in his view, and I tend to agree. So his general argument, and I think actually he quotes somebody else. I forget to mention, I forget who this was he was referencing earlier.

calculating that for the broader market in the US, I assume the broader market meaning that the key major indices, that every dollar of inflow is worth something like $7 to $8 of market cap. And then for the mega caps, the NVIDIAs and apples, et cetera, something on the order of $75 to $100 in market cap valuation for every $1 of inflow.

For those that were around for my presentations when I was in Zurich and Geneva this week, I have been talking about Mike Green as well and mentioning this. And you can sort of see this crystallized in something like the Walmart chart where you see this incredible advance in the stock price in recent years despite pretty sluggish and slow prices.

A very profitable company, no doubt about that. But why should its P.E. multiple just continue to march higher when its growth is staying pretty much the same? I think the reason is found in Mike Green's theories around passive. So a really good – he's very good at explaining things as well.

And there's all kinds of other stuff in this podcast with the quality of sentiment surveys and how these have deteriorated, and especially politics making things crazy. And I've mentioned that too here on the podcast. And then it's a really interesting discussion around tariffs and AI and how both can actually be quite deflationary. Certainly not a consensus call there. And I think his discussions around AI are particularly interesting on that account as well.

referencing back to the tech telecom and how internet backbone is built out on on some assumptions about usage and about pricing that just turned out to not be the the case at all with with pricing coming down from uh incredibly high levels to incredibly cheap levels and then the final one is uh with goodfellows podcast uh warning it's you know very much a sort of a

A neoliberal, some would call it, or neocon, sorry, a neocon set of people. But I still find some of the discussions they have on there very interesting at Goodfellows. And their guest in this case, an expert Chinese historian, has written a multi-part series on the history of modern China and the CPC, especially during the

the revolution itself, but also the cultural revolution, sorry, the Great Leap Forward and the cultural revolution. I think there must be a couple he's written post that. Just really, you get a sense of somebody who has a profound, you know,

profound assessment of what's going on. And it argues that China may be far weaker in many ways than we generally think. So despite its incredible prowess and ability to climb the technology ladder and be competing head to head at the highest end in many categories now, and even establishing the state of the art in many categories, there are some other fragilities and things that we need to consider in the bigger picture as well. So just a great listen there.

As we're, of course, heading to all the uncertainties around how the U.S. and China sort of navigate this divorce that is ongoing in the coming weeks, months, and years. All right, I think I'm going to wrap it up there, and I wish you all a very careful day ahead with the U.S. employment report.

Let's see where things stand. I think it's going to be interesting to see the weekly close here to see if we can get a bearing on what this market is thinking. It just feels like there are a lot of cross currents and confusion, as I discussed yesterday. Not necessarily sure that everything will clear, but maybe some things will be clear after today. And we'll be here to discuss it again early next week with the next Saxo Market Call.