How high is too high?

00:00:00: Global stock markets push higher, although there is some unease among US big technology names which seem to be feeling the impact of SpaceX's arrival on market.

00:00:09: Everyone agrees that it has been a confusing debate in terms of size, investor appetite and also this monstrous gap between what the company is.

00:00:19: And how?

00:00:20: It is perceived unbelievable but true SpaceX's now worth more than Amazon.

00:00:25: fortunately some positive news from the Middle East help diverate Some of their attention elsewhere then technology and also encourage some rotation to non-technology pockets off the market.

00:00:36: as the new Fed chair Mr Kevin Walsh preparing to deliver his first speech in the role.

00:00:42: So welcome to Swiss Coats Daily Market Talk, it's Wednesday June seventeenth.

00:00:47: we will talk about a lot of topics including technology and the Fed.

00:00:51: but before we do as always please keep in mind that opinions are my own.

00:00:56: this is not financial advice.

00:01:06: So oil prices come further down.

00:01:08: We are near seventy-five dollars per barrel level for the US crude at that time.

00:01:12: I'm talking here this morning, pulling global yields lower as well and given support to equitimarchists.

00:01:18: The decay is pushing higher in that regardless of the BOJ rate hike we saw just yesterday Other Asian indices also mostly in the green In Europe, the European indices printed timid gains yesterday near their all-time high levels as a benchmark for ten year European yield fell.

00:01:37: For the fourth consecutive session while in D-West technology appetite was quite mixed with SpaceX exploding higher for third day!

00:01:45: The stock was up by more than ten percent pre market.

00:01:49: it closed the session nearly five percent higher and again up into after hours trading.

00:01:54: SpaceX has now a market capitalization of more than two point sixty trillion US dollars.

00:02:00: That's more then Amazon and a notch below Microsofts.

00:02:03: as the result, SpaceX has become still with no profit outlook this year The fifth biggest company in the United States.

00:02:11: The fifth after NVIDIA, which printed nearly US dollars in net income.

00:02:18: After Alphabet with a US dollar net income last year Apple with its US dollar and Microsoft with a net income of US dollars.

00:02:32: SpaceX on it's end printed during the same period.

00:02:39: And there is no certainty that space infrastructure plans of Elon Musk are technically feasible and or whether they will lead to any return on investment in a reasonable timeline.

00:02:50: This isn't something I'm saying, this what SpaceX own IPO documents cited.

00:02:55: And let me get this straight, the acquisition announcement of COSA yesterday changes nothing to the math.

00:03:00: SpaceX cannot be worth US dollars full stop not with today's concrete revenue and spending outlook.

00:03:08: so the bubble talk is growing by the minute for a good reason.

00:03:12: How can a loss making company reach such high valuation?

00:03:16: And how long could this continue.

00:03:18: Today I would say that space is perhaps the biggest red flag, where technology valuations no longer make sense!

00:03:41: fundamentals, whether we're talking about actual or forward-looking values such as sales revenue earnings or profits.

00:03:49: Here are the numbers that make a company accompany.

00:03:51: The prices are hanging in the air instead and in the absence of any reasonable anchor A meaningful correction in valuations is a matter.

00:03:59: when not.

00:04:00: if So in this environment, profit-taking, de-risking and rotation looks smart toward the non-technology pockets off of market especially if the geopolitical and macroeconomic environment improves to soften the hockey central bank expectations.

00:04:16: If that happens we could see capital flow towards cheaper pocket markets where valuations make more sense.

00:04:23: And we sensed it would be getting there because both the technology heavy S&P five hundred and NASAC hundred fell yesterday while the Dow Jones Industrial Index advanced to a fresh all-time higher level.

00:04:33: And in Europe, most stocks are trading with an average PE ratio of around sixteen to twenty today versus NASDAQ hundreds PE ratio or thirty seven and while SpaceX price to last year's sales is now one hundred sixty times last years.

00:04:49: sales not earnings no profit sales just for fun.

00:04:53: So yes, European equities may be boring and the growth prospects of the old continent may not look bright with geopolitical unease which will continue in the Ukrainian case anyway.

00:05:05: Repeated periods of energy crisis a technology lag over regulation And now a hawkish-european central bank policy.

00:05:12: But the good news is that The hawk's policy move from the European Central Bank last week has NOT pressured the European yields higher as latter softened along.

00:05:23: lower energy prices due to good news from the Middle East and softening inflation expectations as a result of it.

00:05:31: Across the channel, The British FTSE hundred is also benefiting from softening yields.

00:05:35: So yes!

00:05:36: Today's question is Is It Time To Go Out Of Tech And Rotate To Or Not Technology Pockets Off The Market?

00:05:42: The answer may be especially if the fare remains soft.

00:05:46: Today, investors' attention will be shifting to the latest FOMC decision.

00:05:50: The Fed will announce its latest policy verdict today along with new dotplots and Kevin Warsh's first post-decision press conference as a new Fed chair.

00:06:01: Now, Kevin Wash is taking over an unusually divided Fed.

00:06:05: in the latest FMC meeting for example three Fed members have voted to hike interest rates against eight who opted for a status quo.

00:06:12: The former three were more concerned by rising inflation in the US due to rising energy prices than the letter eight, who rather wanted to give support to a weakening jobs market.

00:06:23: Then there was Stephen Muir and obviously who voted to cut interest rates.

00:06:27: he has been appointed by President Trump is actively pushing the Fed to cut the interest rate.

00:06:31: so he was special case.

00:06:33: but from an economic perspective looking at numbers U.S inflation spied past four percent mark last month due.

00:06:45: the US is still hovering just below a three percent mark.

00:06:49: Both of these numbers are significantly and persistently above Federal Reserve's two-percent official policy

00:06:55: target.".

00:06:55: The jobs data on the other hand has been weakening, but past three months' data pointed at improved figures with close to one hundred eighty thousand new nonfarm job additions on average each month probably due to the World Cup and massive AI build-up, but numbers were better than expected.

00:07:12: And they're literally fundamentally good!

00:07:14: So whatever it is... The combination of hotter inflation & relatively strong job data suggests that the Fed should do all But cut the interest rates.

00:07:24: Looking at market expectations, remember that investors went from pricing in two to three interest rate cuts from the Fed this year To pricing no change at all with the Iranian war and maybe a late-year rate hike as well.

00:07:38: An activity on Fed Fund's futures are presently pricing In a December rate hike With a sixty percent probability.

00:07:45: So those are wide open both directions.

00:07:48: Investors will be seeking answers to following questions today What direction will the Fed take under Kevin Warsh?

00:07:54: Is the Fed more likely to hold, cut or hide interest rates in continuation of this year and how will markets react.

00:08:01: Now I don't have all answers obviously but we know that Kevin Wash is in favor lower-interest rate.

00:08:07: Duh!

00:08:07: This probably got him top job at FED But he can destroy his credibility by cutting interest when inflation is about four percent.

00:08:17: But on other hand The end of the Iranian war sustainable decline in energy prices could eventually justify the thinking that, to see the US fields move over and equity valuations higher.

00:08:54: Ideally, we will see the non-technology pockets of the market do some catch up with technology peers as a black smoke is now beginning to rise from the SpaceX trade because again, this speculative excesses becoming impossible to ignore making the current situation look like it's no longer sustainable.

00:09:13: so what you'll be interested in seeing here?

00:09:17: a technology sell-off eventually, when and how severely?

00:09:23: potential technologies.

00:09:27: the rest of Threads, Telegram and BlueSky for regular market updates.

00:10:01: Subscribe to our YouTube channel for daily market commands!

00:10:04: And please don't forget to hit the like button on these videos so that you can enjoy them.

00:10:11: So I will meet again tomorrow and until then good day

00:10:16: trading!

00:10:23: SwissQuote assumes no responsibility for accuracy or losses from its use.

00:10:27: Products and services are offered only where legally

00:10:30: permitted.".