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

The Week Ahead in Macro Event Risks These are the highlights only based on best efforts at accuracy, discussed in today’s podcast.

Today’s Links Ruben’s article on the kinds of AI exposure you can achieve in a variety of European names.

Economist Steve Keen goes through way housing markets are still a problem and what drives their direction - momentum in mortgage lending. If Michael Every is correct that in this new era we should wonder “What is GDP for?” If we are rational, it wouldn’t be about having over-priced housing that keeps your younger and less well-off population out of reach of property ownership via excessively accommodative monetary policy and transmission of excessive credit into housing, or having private credit competing with individual homeowners to buy property.

The financial historian Barry Eichengreen wonders if USD dominance is on the wane, with some rather simplified, but still very relevant history on the US dollar and why any future lack of Fed independence endangers its status. (this article behind a WSJ paywall, but if you are a Saxo client on the English version of the platform, WSJ content is a perk of having an account with us - just go to Research-News-Latest and search for “dominance”. I found it quickly that way.

Haven’t listened to this one yet, but apparently a rising star in the Substack universe, Chris Irons, who is interviewed by the very, well, thoughtful Adam Taggart over at Thoughtful Money on why stocks are “pornographically” overvalued as the US economy is supposedly grinding to a halt. We have to be careful with these warnings, of course, even if you and I agree with them, as the stock market is flow-based and that means passive- and buyback based. Something needs to transpire to get people to start pulling money out of this market, until then, valuations are merely an abstraction at the margin or those names less impacted by passive flows.

A hilarious New Yorker article detailing a provocative writer’s abuse of various AI therapy software/AI algorithms to reveal their inanity. AI has a long way to go to realistically pass any true Turing test.

Chart of the Day - Warner Brothers Discover (WBD)

Warner Brothers Discovery received a rich bid from Paramount Skydance (PSKY), with the former up 28% and the latter up 15% - obviously the market sees some synergies here. Netflix was down heavily yesterday on concerns linked to this new competitor. Looking out over the horizon, I wonder it one thing that generative AI might disrupt is content itself, or certainly legacy passive-content entertainment shows. People may become increasingly interested in interacting with AI companions and in realms that they create and manipulate themselves. Will this steal attention share from passive content? Alternatively, perhaps these content providers can harness AI to provide premium services that allow subscribers to insert themselves into their favorite shows or even create new episodes and communities that work together to create alternate plot lines. The possibilities are endless.

Questions and comments, please!

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

Today's links

Here’s Ruben’s investor’s guide to the Klarna IPO.

Here’s US Treasury Secretary Scott Bessent’s blistering editorial on the Fed’s power overreach (as the government slept, arguably) in recent decades. Similarly, after yesterday’s enormous -911k downward revision to Apr 2024-Mar 2025 payrolls from the BLS review yesterday, it is worth considering whether the Fed should manage policy using entirely different tools due to its embarrassing record on measuring what is even going on in the economy - especially in the inflation and labor markets post-pandemic.

Here’s a useful FTAlphaville article noting the debt dynamics for the major economies, arguing that UK fiscal fragility fears are overblown. Some great charts and comparisons. I would insist that the UK is still one of the most vulnerable economies and sterling one of the most vulnerable currencies, however, in the event of any systemic stress across global markets due to its twin deficit and very negative net international investment position (NIIP).

From FTAlphaville’s further reading today, a rather depressing article on what gun violence in the US incurs in the way of costs to the system above and beyond the psychological terror of the violence itself. US remains a weird outlier on its attitudes toward guns, even as a strong majority think it is too easy to gain legal access to them.

Chart of the Day - Gold versus long bond term premium

Today - as we consider the key drivers for gold, it is worth noting the significant difference between this cycle and prior cycles, where the focus was on “real yields” - how high yields were going relative to inflation, or at least the attempt by central banks to establish the narrative that policy would stay tight enough until inflation was tamed. Back in late 2022, the market was a believer in eventual CB success, arguably, as the premium for the 30-year yields over 10-year yields fell and fell as stock markets cratered by late 202 on the massive surge in interest rates. Note the exception of Japan’s experience in 2022 due to yield curve control out to 10-year yields. This time around, central banks have eased while long rates have headed higher as the market is more concerned about long term debt sustainability dynamics - in real terms - and suspects that central banks will maintain rates at more accommodative levels relative to inflation. This shift in the mindset has seen gold flourish even as the longest yields are offering more yield compensation for the risk than ever before in some cases, like in Japan. One challenge to this idea: the longest bonds rallied smartly in recent days without spot gold paying much heed - a blip or falsification of this narrative or have the gold bugs gotten carried away with the success in this bull run?

Questions and comments, please!