Yep: NOK, Wheat and Tesla in the same podcast.
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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, 20th of June, 2025. And yeah, we have markets in a pretty good mood here in early European hours, at least after some, it looked like, I guess, Iran-Israel conflict worries yesterday, a sell-off.

That we've kind of bounced back from. In the case, if you're looking at your U.S. futures charts, by the way, a bit confusing because they didn't bother to make a separate candlestick for yesterday's action, which...

I don't know why they have such a long trading day on a day that's supposedly a U.S. holiday, but that candle's not separated from today. So it's a bit of an odd-looking candlestick that even actually did unfold over two days. And you can see that on slide two in the slide deck. And if you are looking for the slide deck, you can find the link in the podcast description to this episode. So, yeah, so we're sort of bouncing back to neutral a bit from where we were on the Wednesday close today.

Iran-Israel reprieve or coordination from the U.S. side. What is the deal here? I don't know if you have any intelligence or inside sources, Ole, but Trump once again coming up with this two-week time frame. Seems to be this – about two weeks seems to be his favorite time frame. Hard to know if this is something that should give us hope or if it's just maybe pressing the pause button to figure out next steps in a more controlled fashion. Yeah, I think the only thing that's absolutely for certain is that this is not over yet.

kicking the can down the road is yeah potentially could open up for some some discussions or negotiations but let's let's let's see it's it's it seems as having gone as far as they have Israel at this point in time there's there's no for them at least it looks like there's no going back they most certainly want to once and for all get rid of Iran's ability to create create a bomb so I

And does that mean the maximalist, that's what I've been talking about on the podcast the last couple of days, does that mean that therefore if they can't trust this government, they therefore believe that it means regime change? And that's my suspicion, but I don't know this. Yeah, and having seen the success of regime changes in the Middle East for the past 25 years, that's obviously a bit of a daunting thing.

taunting proposition as well. So we'll see. But the energy market has obviously been the main focus this week, given the ebb and flow. We have had news, I think, the main thing, and we're going to take a look at that a bit later. We have a $10 risk premium priced in, I would say probably as a minimum, basically meaning that if every day where we have no bad news –

Oil tends to drift lower simply because that risk premium needs to be maintained. You need to constantly sort of refresh it with a negative news cycle. It needs net bad news to be fed and to be maintained. But I haven't looked over at my crude chart. So we have bounced back in broad risk sentiment. What's crude doing just specifically to like today?

Well, we're just drifting a bit lower today, again, following that news yesterday. But as you can see on slide seven, which we're just going to come back to, we are still sitting close to $80. And remember, we were sitting comfortably – well, not comfortably. We were sitting below $70 up until recently, and that's pretty –

And given the fundamentals we have right now, that's probably where we should be trading. So yeah, this kind of level needs some kind of disruptive development in order to be justified. Okay. Still trying to pull together a narrative post-FOMC. I think it was more about maybe the market had a bit more of a dovish lean on what the FOMC would say, obviously, with that stagflationary outlook.

and bifurcated dot plot that the market doesn't know what to do with the forward rate outlook. And we're going to be up to, it's going to be up to incoming data for everybody here. So it just meant the position got squared a little bit, but it's far from concluding anything. And I will talk a little bit about FX later. That's most of what I had to say there. Although if you look at the highlights there on slide two, also,

Your dollar not fitting with the broader dollar picture. The dollar remains relatively firm in many places elsewhere.

The Nokia was absolutely slammed yesterday because a notice bank came up with a surprise cut of 25 basis points. The market was not looking for that. And we saw almost a 20 basis point move or drop, obviously, in the two-year swap rates for Norway. That was the big surprise of the day. The S&B was a damp squib with only the 25 basis point cut, but also signaling more cuts to come and some various measures warning on currency strength. So

It's just some back and forth, but a very clear-cut line of resistance in the Euro-Swiss, 94, 1520-ish area. And Bank of England, no surprise there, three doves looking for a cut that was not delivered, so no change to the rate.

And then over in metals, I'm sure we'll talk about this later as well. Pretty deep silver correction. That 37 plus attempt was pretty roundly rejected. And to my mind, that $35 prior major high would be the first key support.

Absolutely. And we're just generally seeing a correction. Gold was already looking tired as we started, as we entered this week with the geopolitical threats. It tried to bounce. It came back down fairly quickly. Instead, we saw an extended move in both silver and platinum. Platinum at one point rallied 45% year-to-date. But looking at the chart, we failed to

to break above the 2021 high. So it potentially just also, they are signaling some profit taking coming in. And I absolutely agree, John, looking at the chart and the silver, 35 needs to hold now for this in order not to trigger another one of these quite well-known big corrections that silver is so renowned for. There was certainly some treachery on the way up with almost every move it seemed like in the silver chart. And it's really annoying as well for the silver trader that copper is not delivering that sort of

for the silver bull that copper is not delivering that underlying stronger support. True. But still, performance-wise, it's better than gold this year. But it just gets forgotten when you see these big corrections, which really makes it difficult for short-term focus traders to hang on to positions. Right.

All right, let's look at the earnings calendar. Roll forward to slide three. We have three slightly odd Friday reports. Generally, we don't see a lot of Friday reports from the market, but with yesterday closed, I guess they rolled it forward today. Accenture, Kroger, I don't have any ankle on those. Darden Restaurants, I always tout it as an interesting consumer name. It's low-priced or medium-priced casual dining, so-called. I think it's chiefly the Olive Garden restaurant that Darden Restaurants runs, and it's had quite a run up this stock recently.

Is this something that the consumer is starting to trim back on? It would show signs of consumer weakness, et cetera. No idea. There was no weakness last time, certainly not in the stock price, but an interesting name there. And as well in the consumer discretionary spending category, next week we have Carnival Cruise. Their Mints is a report this week, according to an earlier earnings calendar I saw.

But it should be, if this date holds next Tuesday, talk about a discretionary item. That would be cruises. I remember the last time around they saw absolutely no weakness in their bookings, etc.,

also on that front consumer name nike uh troubled stock for a long time i touted a very interesting podcast the strategery one on what made them have such a rough ride of it post pandemic they are reporting and i saw a negative news item that said this collaboration with kim kardashian's skims line has been delayed for a while i think it might be behind some of the negative draw on that stock this week

or if not, that news broke since then, and we had something to watch today. But an interesting and critical report for Nike, really down on its luck relative to the highs for sure. FedEx as well reporting next week, and in the tech space we have Micron.

And then Eurodollar, again, total limbo here. We sort of rejected that new attempt at new highs as covered earlier this week, 115.73+. That was rejected, but there's been no follow-through. We're still arguably in a price channel, 114.50, a pretty solid, you know, arguable support level there, pivotal level there. So, yeah,

So what's the status? We have no idea. Mid sort of uncertainty range, maximum limbo. Long term, we're bulls, but a dip below 114.50, 114, and we could be struggling in at least the upper half of that range established since the 110.65 low.

And then again on FX, slide five, so you see that huge direction change in the NOKI. There probably might be a little bit of legs on that given how strong it was before this big surprise move by Norisbank. I don't know if maybe some of the currency strength gave them a little bit more encouragement to make this move, how that NOKI strength would feed into future inflation readings, but there you have it. And then Yen taking over in the minus or negative trending category, quite remarkable from the dollar.

Is Dalian really about to set up for a rally here? The technicals are very messy, but certainly it needs to get crushed back below, well below 145 and then some to argue that this little attempt higher has been fully rejected. So

And as well, yen is very weak in some of the crosses. Urien is just running away to the upside. I'm just amazed that we're almost pushing towards those all-time highs. And I think crude oil strength might be an angle there as well.

Yeah, it's interesting. Overnight, we had CPI from Japan. And actually, right now, Japan has got the highest inflation among the eight peers, and it's got the lowest interest rate. And maybe there's something that has to do with the currency as well. Indeed. And we have an election coming up where handouts is being promised because this kind of inflation level is starting to hurt. Yeah, so it's one of those odd things where you get that higher inflation reading.

And it doesn't support the currency because observers say, well, they're just not going to do anything about it. It means that the real yield is even worse in terms of the purchasing power of the currency. So yeah, a great point, Ole, and-

It just feels like something has to happen post this election. The election date, by the way, has been established. It is July 20th. So we have that date to put in our calendars. I think the year is going to be in a very different place somewhere down the road. I talk about that a little bit on the FX webinar I held yesterday. I have a link to that in later in the slide deck. So you can look forward to that if you want to listen to me grinding on for about an hour on foreign exchange and also a little bit on the geopolitical and geoeconomic outlook.

as well in that webinar. So yeah, that wraps up FX. I think Aussie Kiwi looks a little bit pivotal. Is this 108 plus area going to hold a Yuranoki in for a nasty reversal? And Dahlian, what is the status, what I'm highlighting there in the single pairs? All right, Orla, we have a strong year for commodities, as you point out on slide six. So take it away.

Yeah, we hit a three-year high this week. No surprise that the engine behind that fresh rally was the energy space. It has been precious metals up until now. I put an insert here just highlighting some of the

some of the Bloomberg Commodity Index total return indices, both the sector as a whole, but also the individual commodities. As you can see on the weekly performance, very strong in the energy space, not least, which is probably not that war-related to the Middle East, natural gas up 16%, but we have something like diesel up, diesel and both in New York and London up around 15%. And that's really where we're seeing a bit of a squeeze right now with the refinery margins going up.

because some diesel refinery plants have been shut down, especially around Israel, and that's raising some short-term concerns as we move into this peak demand season.

Energy doing well, but also the grain sector was actually sprung back to life a bit. We can see on the year it's still close to flat, but we're seeing some strong gains this week in the wheat market. Yeah, you were showing me pictures yesterday of some wheat fields. I think it was in Oklahoma, which is not a wet place, and they just looked like they were growing wheat in a rice paddy with flooded rice paddy fields. Yeah.

We had a troubled start to the harvest of the winter crop in the US and that's

That's partly driving it, but I think the main engine, as you can see on slide 8, is simply short covering. So far, we have been under pressure for... Well, we've been in a downward trend now since 2022 when we peaked around the Russian invasion of Ukraine. But since then, we've tried to stabilize. So even though we have these troubles and we've got some hot weather warnings, dry weather warnings, both in Russia and in parts of Europe...

The outlook is still fairly okay, I would say. So we need further deterioration for this market really to break higher. So I'm just highlighting the September and the December contracts of the CBOT wheat contracts. And also on the right-hand side there, managed money, so hedge funds, speculators, they have been net short wheat for a record three years. So it really has been a...

a favorite short and part of that is the fact that the grain contracts tend to be in contango so the forward price is higher than the current one and that basically means that you are rolling a small profit every time you roll a short position into the next at a higher level

So really for that to change, we need to see a spike at the front end of the curve to kill some of these trades, thereby adding further upward pressure from short covering. So we're not there yet. So I'll say fundamentals are still lacking to support a sustained rally, but most certainly one we're keeping an eye on. Yeah, and basically making money on that short by selling insurance. I guess what that says, selling weather insurance, and that's what that forward contango represents. And then I guess you...

get called on your insurance when the weather disruptions are sustained over a long period of time. Yeah, so we need to watch that. And...

And apart from the metals that we talked about, taking a breather potentially for an extended period of time. I think just talking about gold, I think the underlying reasons for holding gold has not gone away. But right now it's quite clear that the market wants to see a clearer sign of incoming rate cuts in the U.S. simply because the funding cost of holding a position is still quite elevated the one year.

One-year funding rates in the U.S. is still close to 4%, and that needs to come down really in order to trigger the next leg up. And that just basically brings us into a period where there might be some profit taking coming in. The dollar is obviously a key part of that, and then we have the ebb and flowing of news out of the Middle East. But turning to the oil market, we also talked about it earlier, John. As I said, I think there's a risk premium of $10 priced in. But at the same time, if we do see a real disruption to flows,

through the Strait of Hormuz, then that risk could easily be $20 or $30. So that's why it will be maintained. But as I said, every day where no news or bad news hits the wires, then the price tends to drift lower. I just put in an insert from Energy Intelligence just recently.

Some of the ways that oil from this import region can be circumvented in the Strait of Hormuz, and the most important one is clearly the Saudi Arabia's East-West Pipeline, which basically can carry 5 million barrels a day. Right now, capacity is less than... Right now, they're using it for less than half a million barrels, so that can really be revved up.

And we've got other support export lines, which is outside the Strait of Hormuz. So it's not all going to be locked in if worst case scenarios happens. But I think it's also just worth pointing out, throughout the wars we had in the last...

two or three decades, the Strait of Hormuz has never been blocked completely. But the threat of blocking can be enough for ship owners to say, well, we're not going to run the risk of sailing through, so we're going to stand back. So it's a fluid situation which can still develop. All right. Thanks, Ole.

And looking at the macro calendar ahead, a pretty busy week ahead in many respects. I think geopolitically quite interesting. Well, it's constantly interesting on that front with around Israel. But we have the NATO conference on Tuesday and Wednesday of next week where, of course, it's going to be all about the European NATO partners with the U.S.,

trying to manage Trump. And do they manage him well enough for him to escape notice? Do they promise the 5% of GDP that's been talked about, or at least ramping up to that figure? And Spain has been making noises about not wanting to ramp up to such a figure. So the lack of solidarity there could be an issue. A very interesting one on sort of the signaling of EU-US alliance there. And then Monday, we already have something interesting up with the France-Germany Eurozone flash PMIs.

We need to start seeing these turning up at some point. It's maybe a little bit too early now, but at some point, these need to start turning up to suggest that some of the fiscal is incoming. And it feels like that's going to be a little bit more backloaded at best to later this year. But maybe the margins we're spending is happening to get some of these priorities, at least in manufacturing, in gear with defense initiatives, et cetera. We have...

The Germany June IFO business climate survey Tuesday, again, related to specifically Germany and its status. Look for the expectations there. Quite important. Fed Chair Powell with a two-day testimony. This is going to be political theater in large part. I think the most interesting thing on the political theater part is Trump calling for 250 basis points. I think it was the highest number he mentioned yesterday.

of cutting and what is the MAGA pressure from the various senators in the, for on Tuesday session there. And then from the house on the Wednesday session and you know, how heated does that get? It doesn't, you know, it doesn't mean that Powell's going to do anything about it. It just is an interesting yeah. Angle on this.

And rolling forward, we have the usual interesting and increasingly so weekly claims and then PC inflation on Friday with the final June Michigan sentiment. Further ahead, again, that Japanese upper house election. Now let's go forward one more slide to slide 10. So the appendix must reads, I think some really good ones here.

I've actually not listened to that first one. I just began to listen to it and I was so inspired about the subject matter that I actually bought the audiobook. So it's a Stratechery interview with the author of Apple in China. This is written by Patrick McGee and it's an incredible backgrounder. I've not listened to the whole audiobook obviously, but I've listened to the first couple of hours of it.

Really fascinating stuff. If you haven't dipped into your Apple history and the whole angle on how Apple, well, of course, China helped Apple to realize its hardware dreams and the incredible profitability that it has achieved with quality manufacturing and scale.

In a way, I think the angle is that Apple helped to build China. So, of course, by coordinating this and bringing in expertise and building expertise in China, that expertise, of course, spread laterally throughout other suppliers and manufacturers in China to build products that are of equal quality and can match the quality of Apple, obviously, with Xiaomi telephones and otherwise. So,

If you just want to stick to the podcast space, you can listen to that episode or, of course, you can download the Audible. Audible, or not an Audible, but you can download the audiobook. You can use Audible or any other service you want to for that book. I'd highly recommend it there. And then as alluded to, I had my

Mastering FX Trading webinar. It really is more just an update on FX. There are some aspects of trading FX and some observations as well. But you can find that link there as well on slide 10. And a very good Oddlots interview with the amazing Jillian Tett of FT. Wonderfully deep thinker with a historical perspective on the global financial crisis, how crises develop and

in financial markets, how often the solution to the former problem actually creates the fertile soil for the next round of problems, her stab at what the next round of problems could be. Among those, the reliance on cloud and the very few points of failure there are using cloud infrastructure with only one or two providers or two to three providers, and what she calls the fifth stage of capitalism. Great interview, great thinker, highly recommended. And then finally, Mish on BLS.

So BLS has that establishment report that's our classic non-informed payrolls change every month, the measure of the U.S. payrolls data. And it's just an increasingly bad one. I mean, we're at a 42.5% response rate on a survey of 629,000 work sites across the U.S. So we're only getting a 42% plus rate.

response rate. It used to be 60% pre-pandemic. And then there's the issue again of this birth and death model, meaning that they assume a certain number of new businesses have been born and there's related jobs to those. You get the real data with this. It's quite delayed, but it's the real data. This QCEW he points out

12.2 million work sites and basically 95% of the workforce. And it is showing and suggesting that as of the latest data, which is only through the end of last year, that the BLS is increasingly, at least at that time, over-reporting payrolls growth relative to what it actually was. So some risk to the U.S. labor market data in the revisions, as we've been seeing quite often over the last year.

I've also provided a downtime link. So for this weekend, if you want to wrap your head around one of the greatest card games ever invented, you have to get a very special deck of cards to play this. If you're from France, you may already have one of these. It's basically the original tarot deck or tarot as it's called in Danish.

Not for occultism use or being a psychic, but it was actually originally invented for playing cards. It's an incredible three-person card game. It'll probably take you several days to learn this, but I'm a total card game nerd, and I think this is an interesting one. I just wanted to spread the word. It's something I've invested a lot of time in. And just for an idea of the complexity and the different variety you can get, because of the size of the deck, and it's for three players,

There are actually 1.5 quadrillion more potential card distribution possibilities in this three-hand tarot card game than there are for Contract Bridge. All right, that is a wrap on those things. I think I wanted to mention two more things. There was the accusation from the New York Post that Russia and Iran are making tens of thousands of social media bots to divide MAGA. I wonder if that's something that could –

be driving some of the noise you're seeing in the space, which is considerable, but there have been some profile figures out with disagreements. So that's not necessarily being bot created on that front. And then Tesla this weekend, I forgot to mention earlier on the equity coverage, it is meant to be launching its robo taxi service this weekend in Austin and

Of course, we wish them all the success in the world. Nobody wants to see accidents. But just to point out, it'd be very interesting if an accident does occur, what kind of impact would that have on Tesla's share price? I think it would be quite devastating. So the stakes could not be higher for that company, which is not priced, again, as a standard automobile provider, but is based on future projections for its autonomous driving.

uh and related services so big stakes for tesla over the weekend all right i'm going to call it a wrap for today have a wonderful weekend out there stay careful and we'll be back next week with a saxo market call