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

Today’s Links

My former colleague and formidable market technician Kim Cramer Larsson has a substack now with daily rundowns of the key charts across markets.

Wolfgang Münchau has the must-read of late on the shape of reality in the Ukraine War and how we are likely headed for the war’s suspension soon - my chief hope has to be that soldiers and civilians alike stop dying and for a long time.

Mike Green with a very long and thoughtful piece on the middle income portion of the US middle class and how they are squeezed by the cost of living and unable to access all of the support that the lowest earners can receive - this is critical stuff.

Endgame Macro pulls out an interesting credit indicator and what it signals.

A counter-argument to that piece I passed along too hastily on the AI “fraud” perpetrated by Nvidia and others. HT FTAlphaville.

A piece (again, HT FTAlphaville) quantifying how bizarre last Thursday’s session was in the US. My suspicion is that it simply shows the magnitude that the options market has reached in determining short term market volatility (re - NVDA earnings and the Friday expiries post their Wednesday earnings report).

Bessent making it clear why we shouldn’t give too much of a hoot who replaces Powell - it’s called fiscal dominance and Bessent will be in control, with the Fed as an auxiliary to the Treasury’s agenda.

Every’s latest includes reference to two stories of interest - China’s “holding all of the cards” in pharmaceuticals and its increasingly astounding and human-lite production prowess. There’s also this one from the Wall Street Journal on a pharma startup needing official support if it is to avoid China’s predatory mercantilism as it funded the company.

Chart of the Day

Questions and comments, please!

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

Today’s Links

HT Matt Stoller (via Michael Every), a story on the US Pentagon first steps at real cost controls after decades of defense contractor gouging - simply trying to establish the ability for troops to maintain their own weaponry. “What is GDP for indeed” as Michael Every would say, and I have to wonder if, outside of defense giants, GDP is for bloating Mag7 monopolies and capturing a dominant and rising percentage of national profits either. In the long run: no. But in the short run, Meta wins monopoly trial, convinces judge that social networking is dead. True - now it is slobbering doomscrolling and Youtube, Tiktok and Instagram are all going head to head there.

Ukraine’s killzone - a different kind of hellscape from WWI, when you can’t hide from the air and drones are even fighting drones. I hope a peace deal can be agreed soon, this is simply as awful as it gets.

A huge test ahead for agentic AI - this could go badly wrong.

Chart of the Day - Two ways to look at the Nasdaq 100 Index

It’s pretty straightforward to run through the US Nasdaq 100 index market technicals locally and identify the levels we talked about on the podcast, like the area into the 24,000 former high from August (and Sep. retest), which is just below the October low of 24,200. And then there is the lower major support, the former cycle high before the April meltdown in the 22,200 area. But zooming waaaay out, we can look at how the market is priced relative to trend, using a linear regression formed during the very steady and stunning advance of the 10-year period from early 2010 (to avoid bottom picking of March 2009) to the end of 2019. Those lines are shown on the chart below, and I have extended them to give us a look at “out of sample” data performance since then. Of course, in 2020 we had the wild and brief pandemic wipeout followed by the insanely easy money (and Stonx Bro’s) rally into late 2021, which took the index well in excess of two standard deviations above the trend before the Fed finally turned hawkish enough to trigger a bear market that took us solidly below two standard deviations below the trendline when….ChatGPT was released in November of 2022, forming a key part of the market narrative since then that has sent us to fresh highs and above the old two standard deviation line. So a more significant market correction to the lower two standard deviation line below trend in early 2026 would send us to around 20,000. But it is also important to realize that market cycles don’t persist forever and we could get something far more disruptive. Consider the dangers of this type of approach in the chart below, where we map the 1988 through 2010 experience in the Nasdaq 100, which contained the period with similar spectacular performance, if with key key differences.

Questions and comments, please!