Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
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The art of the deal, or at least the art of the pause button.
Saxo Market Call
Summary: The US and China appear to be headed toward a trade deal, or at least an agreement to come to arms-length terms to de-escalate on a number of fronts for now. This is boosting already bubbly risk sentiment further as we enter the heart of earnings season, where five of the Mag7 are reporting later this week. All the AI-related spending will be a key point of scrutiny. Also, an update on macro and FX with four central banks meeting this week, some links and podcasts listens and more. Today's pod hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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Today’s Links
How should we position this apparent US-China trade deal? Is it China submitting to US terms, merely detente, neither? Here’s one forceful argument that the US is winning and that China has just made its “first payment" in a new global protection racket run by the US. I’m cautious to read things this way. Brent Johnson explains the system and how deflationary bust pressures are required to create the next round of stimulus. Great run-down. Grant Williams recently interviewed Julien Garran of MacroStrategy on the AI mania and whether it, together with other misallocations of capital represent “the biggest and most dangerous bubble the world has ever seen”. Fun! A great one from the Dark Side of the Boom on Japan’s Nikkei 225 blowing past 50,000 for the first time, as well as the drivers, including Japan’s embrace of its prowess in defense-related industries, as well as the further potential that could be realized and value unlocked if Japan loosens up rules around mergers and acquisition. Japan has the most listed companies of any major market. Also, this one on the related JPY upside potential on the repatriation of Japanese savings - fits with my view of JPY trading far too weakly. For downtime: the EndgameMacro with some truly far out stuff on UAPs and links to the bible - prompted of course by statement from a member of the US House of Representatives who claims the US government has evidence of “interdimensional beings”. The Nikkei 225 just past 50,000 for the first time, handily outperforming the US Nasdaq 100 index even in USD terms, with AI having little to nothing to do with the Japanese stock market’s strong surge this year. The outperformance of more than 50% is a remarkable achievement, and currency effects might keep the rally going for foreign investors if Japan decides to repatriate some of its savings to invest domestically in a booming economy with a supportive policy mix from the new government. Chart of the Day - Nikkei 225 outperforming Nasdaq 100 by over 50% this year.
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