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, everybody. It is Friday, 30th of May, 2025. I thought I wouldn't be back until Monday. I'm supposed to have the day off here, and I'm in the office trying to get caught up on some things, and I'm not getting caught up on them because now I'm doing a podcast, but there you are. I just feel like there's so much going on today and important moves in the market yesterday. I couldn't not drop at least a few-minute podcast to discuss a few things here. Oh, and then another small thing. We had a
uh oddly i noticed that the numbers were not adding up on the podcast uh yesterday and i found out or the day before yesterday on the wednesday podcast and i found out that it was not being uploaded to apple podcast so
Sorry to everyone out there on using Apple Podcasts, but something about the image size not being right or something was not causing a problem before, and suddenly it was causing a problem on Wednesday. That should go away as of this podcast episode, but if you are seeing that you would expect that there should be one out there and you're not seeing it, you can always head over to our host site,
saxostrats.podbean.com. That's saxostrats.podbean.com and see, you know, that'll obviously have the latest update. So apologies for that. Hopefully that squared away and a non-issue. Okay, so what happened yesterday? A really critical day. Again, we had the Wednesday post-close NVIDIA report. They absolutely shot the lights out in terms of their results, in my opinion at least. They
posting the growth that they did despite the need to write down all those chips that they can't send to China. And then the next quarter estimate almost matching the previous estimates despite an $8 billion revision downwards because of the inability to sell those chips. There was a pretty enthusiastic response to it after the close or after the report.
in late hours, and the stock opened up quite nicely, but then pretty much, as the broader market did, sold off most of the day. So I think that's a really pivotal sign there that despite very, very good news, maybe that NVIDIA is having this so-called size problem. I mean, you're talking about a company that's going to grow, is priced to grow to something like $200 billion in net income or positive cash flow.
for its year ending in beginning of 2030, something like roughish 15 times those earnings or that cash flow in the price now. And of course, that's a lot of growth relative to where we are now. And when you're talking about a size problem, it's because once you're at these types of levels, where do you go from there? Do you seriously expect a company to grow to half a trillion dollar profits over time to justify some of these forward multiples? So
I guess that's the logic anyway. Basically, we've sort of delivered about as good as you could possibly expect. We're seeing the signs of this ongoing demand also in things like Dell's report. And it was things like these big data center buildouts in the lease that could continue for another few quarters. But we have to wonder where the growth comes from once you shift forward beyond this year and maybe a year or two into the future.
But I think overall, just looking at where we are with the technicals after a day like yesterday, just a really nice setup for the market technician trying to look for pivot points in the market. You have the futures, the NASDAQ future and the S&P future, posting what is effectively a shooting star formation, a very nicely formed one for the NASDAQ.
And maybe even nicer formed one for the S&P, a little bit less amplitude there, but basically a Doji shooting star candlestick. Consult your Wikipedias for what those mean. But a classic bearish candlestick. And again, after piercing key resistance in that retreat position,
Looks pretty ugly. If you look at the cash index, less to look at there, but still on the NASDAQ, even so, the NASDAQ index cash index, you see the dark cloud cover formation. So I think it's easily certainly a pivot point to look for. And I think the bears have something to grab onto here. We are in an overbought market. We've had such an amazing comeback recently.
At least some consolidation could be set from here for a bit. And if you look at Europe, I think even more so, just all the various oscillators and classic things like divergent momentum sending off some warning signs that this incredible role we've been on is just due for a bit of consolidation in the near term. Yeah, and then looking across at FX, also a really key pivotal day here. And we had this very interesting story, of course, that the U.S. Court of International Trade
Essentially saying that a lot of Trump's tariff assessments or tariff policies are not legal and therefore need to be unwound. For now, another federal court said that the tariff collection can continue. The White House has said there are other ways to go about this. And who knows, this could end up becoming legislation in Congress in the end here.
But it was just interesting to see, of course, that the big market reaction, the dollar spiking much stronger, and then completely unwinding that reaction, I think provides as well for currency traders a very nice pivot point here, something to trade against for the dollar situation. So we had that dollar-yen pumping higher all the way to that 61.8% retracement above 146, finding the key resistance there. And then as with the U.S. equity market, we saw a pretty climactic trend
sort of shooting star type of formation. So it certainly gives you the point where it's clear where the dollar needs to stay below now to continue lower. And then we'll see if it can progress lower into this 142 area. And then, of course, eventually challenging the absolutely massive 140 area on the charts. We had the Tokyo CPI out overnight, by the way, 3.3% ex-food and energy, just an incredible inflation level relative to where the policy rate is in Japan here.
And then somewhat similarly and less clear cut on the technical side, but still a key reversal in Eurodollar. So I think it traded, what was it, 112.10-ish. And then we're trading into the high 113. So a very nice sort of statement on the charts there for where the dollar may head from here. And I think that's an important one. Also, some of the economic data potentially driving that.
As well, we have the jobless claims out yesterday. Once again, teasing a bit higher. So we've had those string of releases in the 220s, 220K area, the one yesterday out at 240K. And the continuing claims, once again, over the old sort of range, well above 1.9 million. The prior one was revised slightly lower, but still, once again, this is an interesting indicator. And to me, we need to see maybe four...
weeks in a row, or the average at least getting up to well above 250K. I think we're starting to get signs of a U.S. recession incoming. A lot of the government employees that took the deal
By the way, or were let go by the Doge episode, etc. They're still not yet registered as being unemployed Apparently that could change in in June. They could end up on the claims Somehow that was in the news story at least so watching that indicator in coming weeks It picks up a lot more interest if we start seeing a trend there. So that'll be especially interesting next week
And then I think something we really need to pay attention to, a big article that the FT led with this morning, and it was actually something that was there all along in this so-called big, beautiful bill that the U.S. House of Representatives passed, the so-called Section 899. So you can either look it up on FT.com if you don't have a subscription or just look at other articles related to this Section 899 of the bill, which is about taxing basically –
foreign entities on things like dividends and corporate tax coupons, everything basically. And especially interesting that it would look at taxing income on U.S. investments from sovereign wealth funds, which were previously exempt. And things like probably, of course, U.S. treasuries, all those billions that are being paid in interest from
to foreign entities that are not taxed domestically in the US might be taxed in the future. The idea would be to scale into this tax at a 5% level that would go up 5% per year until it reached 20% over four years.
So a massive implication here. This is some form of really capital controls and seeking to tax all that inbound capital that comes into the U.S. that is sort of the flip side of the U.S. external deficits. Does this scare away capital to a degree? How much can it raise for the U.S. Treasury to stabilize the U.S. fiscal trajectory?
et cetera. Key questions here, and it could certainly spook markets, and I think spell some trouble, of course, for relative performance of US markets versus the rest of the world, something we've talked about before. A key sign here, a really key policy sign here. This is not law yet. It is Section 899, but let's see if this survives whatever the Senate comes up with as they grapple with this huge bill, and we end up with something that then goes to Trump's desk.
All right. And then we have on the calendar today, the German CPI, we have the USPCE indicator later today, as well as the final Michigan sentiment reading. Does it get that bounce on the May? So because the final May reading, we had a lot of news intro month here, a lot of action, of course, in the equity markets, etc. We saw a huge bounce in the conference board survey on the expectation side of things today.
I don't think it's a hugely important release, but it could be interesting on that one. And then next week, on Tuesday, we have the EU CPI and the ECB is up on Thursday next week with the expected cut. Guidance will be really critical there. Are they gathering a bit more dovishness on the outlook for growth, etc.?
And next week, we have all the key, of course, first week of the month surveys, ISMs, and the U.S. jobs report will be next Friday. So an interesting one there. All right, I just wanted to come in with a quick one here on Friday. I think it was a key day for markets yesterday. Let's see how we close the month and the week today. And another final note, it was funny the other day, I was working from home,
And my wife, who works from home often, overheard me as I recorded the podcast and said, Holy cow, John, you speak way too fast. How the heck are your listeners even following along with what you're saying? If anybody has a strong opinion that rhymes with what she is saying, feel free to chime in. Let me know, and I'll see if I can control the cadence and speed of my speech.
and in future podcasts. So you can always reach out to us at any time with any comments, requests, or otherwise. MarketCall at SaxoBank.com. That email address is MarketCall at SaxoBank.com. All right. Stay careful out there, everyone. Have a wonderful weekend when you get there, and we'll be back next week with the next Saxo Market Call.