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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Retail frenzy while credit concerns fly under the radar.
Saxo Market Call
Summary: Today we look at many AI names and the broader market posting a strong day, if one that finished off the highs - while Tesla shareholders got a very bad, no good bearish candlestick. Importantly, we cover the big markdown in private equity stocks, possibly linked to the First Brands bankruptcy, as well as whether this is this is a one-off or the beginning of a wider contagion. Geopolitics, macro and FX, more links and much more also on today's pod, which is hosted by Saxo Global Head of Macro Strategy John J. Hardy.
Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.
Today’s Links
Bloomberg on whether Japan’s political system is about to be up-ended by a crumbling LDP. A tweet from Craig Fuller (good follow) reminding us all to look at the bulk of the industries and participants in the US economy, where recessionary vibes are in evidence as opposed the narrow slice that actually work at the Mag7. FT story on Australia’s attempts to put together a defense of the realm with “ghost bats and sharks.” More on struggles to get AI to actually be useful for something The First Brands story Today in the Please, let it be true! department Yesterday saw our equal-weighted AI basket (non-total return, just the share price, but dividends are teensy) posting a new high (on podcast, I mistakenly stated it hadn’t quite reached the high). Quite interesting to note the variance in the daily performance of many of these stocks - not exactly a monolithic trade.
I can’t stop including FTAlphaville links of late, it seems, so here is another one from an actual US designer who has been trying to use AI for years and notes the lack of progress in his own work, in the works within his industry as well as some broader metrics that suggest “crickets” on the progress of real solutions stemming from AI.
First Brands coverage from privatedebtinvestor.com, showing the company had a staggering USD 11 billion in debt exposure - USD 500 million of which was apparently with UBS. Here is a bit easier to digest Bloomberg coverage, which includes further interesting sublinks like this one. Another story from Bloomberg also here. The FT also running an interview with short-selling legend Jim Chanos on whether this is just the tip of nasty iceberg in the space, where hiding stuff below the surface is for a reason, or as Chanos puts it, “opaqueness is a feature, not a bug”.
Have we passed peak social media? Don’t let the hubris burn on the way down if so…AI Basket (Bubble?) Update
Chart of the Day - Tesla (TSLA)
Couldn’t resist posting a chart of Tesla today, with its gigantic bearish engulfing candlestick - a high odds formation for bears, if only in the short term, according to chart pattern authority Thomas Bulkowski. To boot, this one is especially large in scale and almost fully “shaven” or marubozu, with only the wisp of an upper shadow, in other words with nearly all price action taking place between the open and closing prices. First focus lower might be the 400 area (round level for options strikes and near the gap that is filled just below), with the lower key breakout level also marked.
Tesla Weekly
When we zoom out, pretty remarkable to remind ourselves that Tesla first hit the 400 mark all the way back in late 2021. For the late comer buying at 400 back then, it has been a long walk in the desert - with a 75% drawdown followed by as much as a 400% draw-up. The latter will be tough to repeat unless Musk and company can deliver at multi-fold increase in their business, whether driven by massive autonomous driving services and robotics revenue and semis or some new fantastic tech that always seems to be just over the horizon.
Questions and comments, please!
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