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Today’s Links

The overnight policy rate that the Fed targets with its tight policy corridor (4.25-4.50% until tonight’s FOMC at least) just popped above the corridor to 4.51%. A Bloomberg article looks at the important things this could be signaling.

The FT notes that non-US investors are rushing to currency hedge their US investments.

It’s important to consider Trump’s new voice at the Fed, Stephen Miran, who is participating in this Fed meeting and likely trying to convince his fellow Fed members to consider whether the Fed has a third mandate: keeping long term rates moderate, as he has outlined in previous position pieces. Bloomberg on the spot here with Fed ‘Third Mandate’ Forces Bond Traders to Rethink Age-Old Rules.

The IEA will also describe a scenario in its coming World Energy Outlook that suggests fossil fuel demand growth could continue for decades to come, a move motivated by the Trump administration as the US helps fund the IEA and would have pulled funding had it not. Free market forces aside, this could carry some sway among politicians and regulators, where ESG and some carbon offset programs are already losing steam. I suspect traditional crude oil demand will peak and be in reversal, together with the geological availability of cheaper crude oil supply within fifteen to twenty years on the electrification transition. Natural gas, meanwhile, is the key “bridge” fuel to get us to the fully nuclear age.

Meanwhile, the is the US electric grid nearing its breaking point?

As mentioned on today’s pod, investors’ results with this CONY ETF, an ETF that owns Coinbase as its sole holding and sells covered calls against, show how poorly many retail traders time their investing and trading. But even more so, why do ETFs like this even exist? The ETF recorded a total return of 41% over the last 12 months, when the Coinbase stock was up over 100% over the same time period. NOTE: I mistakenly stated that this was a Morningstar ETF - it is not - it is one from provider YieldMax)

Anthony Pompliano interviews Henrik Zeberg on the outlook for the US economy rolling over, even if equities may continue to melt up. Some stuff in there about the four-year cycle in Bitcoin that I haven’t listened to.

Chart of the Day - Gartner (IT)

A contact recent told me that a friend of his working in the US for Gardner, a consultancy firm, that business is drying up as more potential clients are simply using ChatGPT to come up with a business plan rather than hiring consultants. And then within the same week I hear the same on a podcast, also noting Gardner’s stock decline. Does this speak to the potency of AI or possibly to the idea that consultancies were mostly useful as a CYA for corporate management - if their advice worked out, then “Wasn’t it a good idea we went with the consultants!” and if things don’t work out, it’s “The consultants were supposed to be good, but their plan just didn’t work out. Wasn’t our fault!”. No decision is easier than one that doesn’t require you to put your skin in the game and AI provides a very cheap alternative to consultants! Is CYA the killer app for AI? Gartner’s growth rates are tumbling and the share price even more so.

Questions and comments, please!

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

Today's links

The Munich Auto Show 2025 is this week, and while China’s EVs are setting the standard in many cases, it is still interesting to see how global carmakers are responding. The next generation of cars is looking more compelling than ever, both from design and range perspective. Here is a preview with some slick video, although people like this guy will be interesting to follow as the show unfolds this week.

Matt Stoller, a great voice against increasingly monopoly power and a true democrat with a small “d” has penned a good one over at his BIG substack on the increasingly fragile US economy that is over-reliant on stock market gains to drive the economy forward, which at the same time drives inequality. As mentioned, this reminds me of Peter Turchin’s “wealth pump” notion in the “cliodynamics” driven framework for why the US is socio-economically destabilizing as outlined in his End Times book.

We all know that Trump has low approval ratings, but there are shades of grey within the ratings that are as important, as far more Americans now strongly disapprove of Trump’s performance, while fewer voice strong approval

Here’s another guest on the Thoughtful Money podcast outlining the factors pointing to the risk of a further slowdown in the US economy and a strong outlook for commodities with investor David Hay.

And Jack Farley host a couple of podcasts recently that point to big questions in US credit markets - something you can hear a lot about anecdotally these days but where systematic, publicly available data is non-existent. One with a regulator and another with a consultancy service that analyzes banks on behalf of clients.

Chart of the Day - Oracle (ORCL)

Oracle has suffered a downdraft of late, one that has been a bit more extended and deeper than the correction in Nvidia and others. The company reports its earnings tomorrow after the US market close. Every earnings report for companies with a significant AI angle drives significant volatility risk, and that is especially so for Oracle on its new status as hyperscaler extraordinaire relative to its prior business model, having transitioned from a capex rate of USD 1.6 to 2.1 billion annually during its humdrum no-growth status back in 2019-2021 to a blistering pace of over USD 21 billion in the reporting year to May 2025, sending its cash flow into negative territory even as its shares have rocketed several hundred percent higher over the last five years. The company also now carries USD 100 billion (!) in long term debt versus USD 52 billion six years ago. We preview what the market will be looking for from Oracle’s earnings report on today’s podcast - but we can certainly say that the market is looking for a lot.

Questions and comments, please!