Japan gets its Iron Maggie, while France achieves new level of dysfunction.

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

Today’s Links

My FX Update from earlier today, including latest FX trend rankings etc.

Here is that X post I was referring to with some stunning indications that we are seeing at minimum a “quant quiver” and possibly even a “quant-quake” of late as low quality stock perform best and high quality stocks perform worst. Also, a useful graphic version of something similar, also from the same poster.

A note from Patrick Perret-Green on some disconcerting reclassification of credit in the US.

Mr. Perret-Green with a full discussion of what he is seeing in private credit, or what he calls “pirate credit” as he makes some deliciously contrarian calls in this long form Monetary Matter podcast. Long JGB’s, short gold, long Gilts, short stocks anyone? Certainly worth noting that the downside of credit bubbles, if that is what we are seeing, unleashes deflationary forces. Sure, we the last few decades of serial bubbles have supposedly taught us that deflation isn’t supposed to happen any more and that the bailout will always come - but if we think of Michael Every’s question “What is GDP for ?”, future bailouts might be far more selective than the previous ones.

Haven’t even seen it yet, but also saw that Julian Brigden is a guest on the same podcast and always spells out his case compellingly - in this case he fears that the entire US economy is a leveraged play on seven stocks and therefore incredibly vulnerable.

The Japan Optimist Jesper Koll argues that Japan will try to both engineer a new bubble and strengthen its currency to fight inflation. I agree on the latter, and the former makes sense but would be tough to pull off.

Chart of the Day - Plug Power (PLUG)

I spoke on the podcast today about “most shorted” stocks doing amazingly well over the last week while some of the supposedly crowded hedge funds longs have been doing poorly. (See more above in the link to an X post) I suspect that in the first category we have a stock like Plug Power, which “operates as a green hydrogen company”. Very short history: it got started in the late 1990’s hype as a fuel cell maker and later added green hydrogen production via electrolyzers to its product set. It has often diluted shareholders to fund itself and has not posted a single quarterly profit or positive free cash flow since achieving meaningful revenue. I remember during the pandemic when its shares rose some twenty fold from the lows on absolutely nothing but perhaps at best that a Biden presidency would bring a boost to the hydrogen economy - or at least cheap funding for this seeming non-profit outfit. I shook my head at the time and didn’t think more of it, losing interest. Since then, it experienced a near death in late 2023 but managed to hold on until the US Department of Energy extended funds for Plug’s hydrogen production units. I wouldn’t expect much interest from the Trump administration in renewing that, but there is supposed hope that the company can deliver long term growth with its electrolyzer business and it has secured new orders for its products. But the scale of the rally in the company’s shares looks more linked to a short squeeze on heavily shorted names like Plug Power. Some 31% of the company’s floating shares are held by short sellers. The shares are now more than a five-bagger from the 0.70 lows of mid-May and were up over 50% just last week. The more than 25 years of this stock’s history show some stunning cycles of hope and despair cycles, most spectacularly in 2013-2014 when it achieved 100-bagger status off the lows of 2013 into early 2014, only to decline by over 90% over the following three years. I have no plans to participate in this particularly three-ring circus.