Middle East, US Jobs & SpaceX

00:00:00: There is now this growing sense that some investors want to take profits across their technology.

00:00:05: holdings after a powerful play since April, while others remain eager to buy every dip out there.

00:00:13: Some investors are likely free cash-to-secure a seat on a SpaceX rocket into next week's enthusiastically awaited IPO so that could eventually give way to small correction in technology space.

00:00:26: Meanwhile all eyes now turning todays US jobs report with the expectation of stronger than expected figures from could reinforce confidence in US economy's resilience and support risk appetite, while weaker numbers today would likely raise fresh questions about jobs growth.

00:00:45: And the impacts of AI and these new technologies on their letter?

00:00:49: The question is do major yet indices reflect iconic reality at all?

00:00:55: I believe increasingly less so.

00:00:57: So, welcome to Swiss Coats.

00:00:58: Daily Market Talk is Friday the fifth of June.

00:01:02: i'm Ipeco Skardishkaya.

00:01:03: we will talk about the world and space economics more but before we do as always please keep in mind that opinions are my own.

00:01:12: this isn't financial advice.

00:01:20: So the mis-earnings forecast from Broadcom regarding its AI chip didn't resonate well among chip makers yesterday and the broader markets.

00:01:30: The private credit stress has also been creeping into headlines since a few days now, And Middle East news remained as muddy & uncertain as they could be.

00:01:42: But hey did?

00:01:42: the buyers are just around corner because S&P's five hundred started today in the negative to finish it with gains.

00:01:50: Lower oil prices on fresh ceasefire news announced by the US pulled oil prices lower in yesterday's trading session.

00:01:59: U.S.

00:01:59: grid retreated more than three and a half percent to below the ninety-three dollar per barrel mark.

00:02:05: Funnily, the ceasefire agreement announced by the US between Israel and Hezbollah was later rejected.

00:02:13: Yet oil prices remain low an appetite relatively untouched.

00:02:17: Unfortunately this morning wilderness is back to Asian session.

00:02:21: Oil prices are only slightly higher than yesterday's low levels.

00:02:26: yet Middle East uncertainties brod enough to maintain risk tilted, to the upside in oil prices.

00:02:32: And that is obviously injecting some stress across the financial market.

00:02:36: so Korean Cosby has just extended its losses too more than five percent at a time I'm talking here while then the K is down by more than one point.

00:02:45: seventy two percent.

00:02:46: European and US futures are also pointing as a lower start to this Friday's trading session.

00:02:53: So overall we started since growing interest for taking profit after decent.

00:02:58: since April, it crossed the technology space and a correction would only be healthy for many technologies.

00:03:03: have you stuck indices at this point in time.

00:03:06: The problem is that buying stress so high today don't develop into healthy downside corrections to bring these valuations to healthier levels.

00:03:16: And moving forward, the upcoming SpaceX IPO will likely keep technology investors anchored to something else than the Middle East led energy crisis.

00:03:26: that could also shift the dynamics a little bit that IPO.

00:03:30: It is said we could actually see some pullback in hot technology names into the IPO as technology investors will be tempted to take their profit and free some cash for spacex shares from next week!

00:03:44: As such, we might see a certain pull back in tech stocks but the latter would not necessarily mean that technology falling out of favor simply preparing for a big moment.

00:03:57: Because like it or not, SpaceX will be the world's biggest IPO and by far!

00:04:03: Yes, the company is burning cash today.

00:04:05: There's no certainty that the company will be technically capable of ever building space infrastructure to justify its valuation Today.

00:04:14: and yes it Is more likely than not That we won't see this companies spit cash in The next decade.

00:04:19: but market valuation for a company like This is more about dream then value.

00:04:23: So the stock price does have the potential To rise once It starts trading on public markets.

00:04:30: I'm given the intensity Of expectations today, it will probably rise.

00:04:34: If anything going short looks way riskier than not.

00:04:37: And given the size of the upcoming IPO, The major U.S.

00:04:41: indices are changing their rules to include these SpaceX in there less as soon as possible.

00:04:48: because SpaceX is aiming to lock-in a market cap around one point eight trillion US dollars.

00:04:54: and even though SpaceX liquidity won't match this standard set for other S&P five hundred companies on the technocratic Elon Musk will hold an outside voting power and this company will be a part of our everyday portfolios.

00:05:12: That ultimately means that the S&P-Five hundred NASAC, which already looks very much disconnected from the economic reality ,will become even more so!

00:05:22: Regarding the valuation though, ETFs tracking these indices also have to buy SpaceX shares to continue tracking them .

00:05:30: So Leroy will certainly support the stock price AND potentially rising stock prices will attract more investors on board.

00:05:37: So that's one right spot into next week's SpaceX IPO, but outside technology this story remains the same.

00:05:43: persistent expensive energy keeps global yields at multi-decade high levels.

00:05:48: central banks globally are turning hawkish on their monetary policies to counterweight the rising oil prices impact on inflation by slowing economies.

00:05:58: The latter maintains sectors outside technology under pressure and narrows market bread.

00:06:04: So there are two paths forward.

00:06:06: A resolution of the Middle East tensions in the coming three to four weeks could eventually bring oil prices sharply and immediately down, hence easing pressure on yields.

00:06:16: The latter could broaden out the rally moving capital to non-technology pockets off the market And build a healthier base for further rise altogether.

00:06:25: Or, the Middle East tensions remain.

00:06:27: The strait of home remains closed keeping oil prices high and inflation expectations rising.

00:06:32: In that scenario, the yields consolidate near multi-decade higher levels eventually pushing higher increasing the boiving cost eroding profit expectations And we see a sharp market correction in which technology would also suffer decent pullback with or without SpaceX or other IPOs coming to demarcate.

00:06:50: Given complexity today I'd rather tilt toward second scenario.

00:06:56: But I'm a pessimistic person by nature so let's see what happens, i don't rule out the possibility of a further rally either!

00:07:02: Anyway today investors will try to focus on the latest US jobs data aimed at Middle East and SpaceX headlines.

00:07:09: earlier data released this week printed better than expected jobs figures in DUS In last month both in terms of job openings ADP payrolls And Today official numbers are expected to print relatively soft but not catastrophic figures.

00:07:25: In numbers, the US economy is expected to have added around eight five thousand non-farm jobs in May with average wages growth seen slowing from three point six two Three point four percent year over a year AI sure costing people their jobs.

00:07:40: We hear thousands of job cut news From technology companies.

00:07:43: were also banks and other sectors that use AI To help them cost every day.

00:07:48: But we don't necessarily hear the number of jobs that are created due to massive AI infrastructure build-out.

00:07:55: And this, in my opinion makes expectations subject to upside surprises.

00:07:59: So if you try put together a reasoning how the markets will react I would say because the set off software and unexpected data won't cool down.

00:08:08: inflationary pressures led buy Middle East crisis and the Fed hogs, instead of stronger than expected figures have the potential to feel risk appetite today.

00:08:18: All thinking that U.S economy remains strong despite everything strong enough to withstand higher Federal Reserve rates.

00:08:25: so in my opinion good news.

00:08:27: Today we'll probably seen an eco as good news through the financial markets left to see if they could outweighed bad news coming from the middle east headlines.

00:08:36: So this is all for this week.

00:08:38: I'm Ipek Oskar Deshkoye And thank you for joining me and Thank You For All Your Beautiful And Supportive Comments.

00:08:45: I hope this episode of Market Talk has been helpful, and it Has Been Insightful To You!

00:08:51: So please do not hesitate to leave your comments, your reactions on your questions below.

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00:09:15: So I will meet again next week.

00:09:18: Until then good day trading and have a lovely weekend.

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