Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
Final thoughts on FOMC as one critical market indicator flashes red.
Saxo Market Call
Summary: Today, some final thoughts on what could be a shambolic FOMC meeting, given the risk of a three-way vote and possibly vague statements, given the possible influence of newly minted Fed Governor Stephen Miran. Also, a very interesting development yesterday suggests Fed control of interest rates is slipping - or is this just a one off because of tonight's meeting? Elsewhere, the US dollar has broken down. This, some must reads and must listens and more on today's pod, which is hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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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. 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. Chart of the Day - Gartner (IT)
Questions and comments, please!
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