Micron-backed sugar rush ahead of US data

00:00:00: Micron delivered exactly what the AI rules needed yesterday.

00:00:04: A powerful learning speed, upbeat guidance and renewed confidence that demand for memory chips & AI infrastructure remains exceptionally strong.

00:00:13: The results boosted appetite for technology stocks around the world after days of heavy selling.

00:00:18: But unfortunately, the celebration may be short-lived because today's US GDP and more importantly, PC inflation data could quickly shift investors' focus back to unpleasant prospect of higher or longer interest rates which on their end haven't been good for increasingly indebted big technology companies.

00:00:42: few days.

00:00:43: So, welcome to Swiss Coats.

00:00:45: daily market talk is Thursday the twenty-fifth of June.

00:00:49: I'm Ipekos Kardashian.

00:00:51: we will talk about tech and global macro but before we do as always please keep in mind that opinions are my own.

00:01:09: But first, let's put everything in the macroeconomic context.

00:01:12: Yesterday was marked by studying in the technology stock sell-off and further rotation toward non-technology European indices where the Kekehont in France led gains.

00:01:22: The Stocks' six hundred also printed a small advance during this session while German DAX underperformed as European peers due to nearly nineteen percent plunge in Rheinmetallus trade price after news that the german government changed its plans to buy six huge warships and Ryan Mattel was supposed TKMS, which is a domestic rival rallys.

00:01:45: Sixteen percent however expected to supply full smaller warships to the German government.

00:01:50: but besides that very specific news The macroeconomics setup remains favorable for European stock markets.

00:01:57: A benchmark for the european ten-year yield fell to two point eighty six percent yesterday.

00:02:02: That was lowest level since the tenth of March.

00:02:05: as oil prices kept falling softening the ECB expectations US crude slipped below the seventy dollar per on news ad, vessels are now transiting the strait of Hormuz with their satellite signals on.

00:02:19: And not only.

00:02:19: a combination of strategic inventory releases.

00:02:22: it collapse in demand from top buyer China and substantial number of tankers sneaking dark out of the Persian Gulf had contributed to small oversupply in some key markets according to traders that Bloomberg interviewed.

00:02:37: That's excellent news for those who are looking have been releasing these strategic reserves will eventually start replenishing these reserves to counter a part of that extra oil supply.

00:03:09: But in the mid-term run, the IEA has also warned at the end of the Middle East tensions – the settlement off the dusts and supply quite ample, which actually hints at further cheapening of oil prices toward the fifty dollar per barrel level on back of this expectation.

00:03:33: So that's my forecast for next twelve months.

00:03:35: Lower oil prices if everything in the Middle East goes well!

00:03:38: So that is good news for the cyclical European indices, that have been grappling with rising energy prices since three months.

00:03:44: That also led to a European Central Bank rate hike earlier this month remember?

00:03:48: And softer energy prices should help tame inflation expectations of other parts including the United States.

00:03:55: The US two-year yield best captures the Federal Reserve's rate expectation.

00:04:00: full point thirteen percent mark yesterday after hitting the highest levels in a year and half, remember earlier this week?

00:04:07: The latter didn't necessarily give us smiles.

00:04:09: technology heavy US indices where the price actually remained flat with the S&P five hundred printing at point ten percent decline as Nasdaq hundred retreated another point forty three percent.

00:04:21: But don't worry because the sun is shining big.

00:04:23: I'm right this morning again on technologies stocks as Michael's earnings announcement yesterday went pretty well to say the least.

00:04:32: The company announced strong, strong results as expected but more importantly they comfortably beat the Wall Street expectations on both top and bottom lines with a revenue nearly forty-one and half billion US dollars versus around thirty six billion us dollars expected by analysts.

00:04:51: It just an EPS came in at more than twenty five dollars vs about twenty one dollar expected by analyst while the guidance for the current quarter was also very, very well above expectations.

00:05:02: The company expects to make around forty nine two fifty one billion U.S.

00:05:06: dollars in sales this quarter versus round forty five billion u.s.

00:05:11: dollars expect by analysts.

00:05:13: Let's say it, I mean It was hard to find a reason To take profit after such is strong beat.

00:05:18: So the stock jumped fifteen percent in the outflow over trading sending The stock price about twelve hundred dollar again and lifting sentiment across the rest of the AI And technology stocks as well.

00:05:29: As such the Korean Cosby is up By nearly six percent at the time i'm talking here this morning with an index volatility that goes beyond imagination bank.

00:05:41: On the other hand, which is another proxy of AI trade as up by six point forty percent and rising while Nasdaq futures are leading gains into the European Open at the time I'm talking here.

00:05:52: we're just before the European open so it's a technology.

00:05:56: stress over possibly micro earnings is giving us sugar rush to tire technology runners this morning and shifts narrative from that massive AIS spending.

00:06:05: increasing the finance buy debt in an environment of rising borrowing cost.

00:06:09: Hmm, very robust demand for chips and data centers indeed to shoulder the rapid AI adoption.

00:06:16: but just a few hours.

00:06:18: Because do not uncork the champagnes yet!

00:06:22: In a few hour from now news headlines will be flooded by ecomic data that could eventually reverse the positive mood we see this morning after the microns results.

00:06:39: updates and focus will be on the PC.

00:06:41: And CorePC figures, which are FED's favorite gojo of inflation.

00:06:45: mind you especially the core pce.

00:06:47: so the headline pc is expected to spike past a full percent mark year over year in the month of May in line with the cpi released earlier this month while The CorePC, the FEDs favourite Gojo of Inflation may have risen from three point three two Three point four percent year-over-year.

00:07:05: both figures are significantly above the Fed's inflation target and rising.

00:07:10: The US inflation data has gained all of its importance since the new chair Kevin Walsh decided to put price stability at focal point.

00:07:27: for the coming months, Fed will be fighting to bring inflation back to the two percent target or at least Back to the easing path toward that two-percent policy target.

00:07:37: So the reasoning is always the same.

00:07:39: It's after an expected set of inflation figures today from The US could tempered a hawkish Fed expectations along with easing inflation Expectations thanks to the falling oil prices that look to be sustainable Today while this out of stronger than expected numbers could further fuel the Federal Reserve Hawks and First, the post-market optimism across financial markets bringing forward an unpleasant topic of rising borrowing costs at a time when big technology is taking on increasing debt to finance their AI ambitions.

00:08:10: As per GDP data, consumer health will be the most important ingredient if you ask me as US growth is becoming increasingly shouldered by manufacturing thanks to massive AI build out and in short run the latter boosts growth news, but in the longer run a healthy and sustainable economic growth is achieved when consumers feel good.

00:08:31: I think that China couldn't achieve Manjoo which is waiting on their financial markets heavily today.

00:08:36: now speaking of AI build out The competition is rising among AI enablers whether it's for building AI models data centers or building chips.

00:08:45: In that context, OpenAI announced yesterday it has designed its own chip – the jalapeno chip!

00:08:51: They did the core design aimed at inference being just running all-range train models and Broadcom helped them with specific knowledge regarding their chip architecture connectivity and stuff like that.

00:09:04: Broadcom said first chips will be used by Microsoft and other partners by the end of this year.

00:09:10: already All you will come next year, they are looking to power ten gigawatts of compute by two thousand twenty nine.

00:09:19: It is the equivalent nuclear reactors.

00:09:24: Huge business!

00:09:25: And they're not the only ones, Meta Amazon Google are all designing their own chips to reduce their costs and secure supply as well As competition intensifies among traditional chip makers and newcomers.

00:09:37: The AI chip market is becoming increasingly fragmented with everyone taking a slice from the pie.

00:09:44: The question is whether the pie can grow fast enough for everyone To still end up big slice.

00:09:50: So this is all for today.

00:09:52: I'm Ipek Oskar Deshkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

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00:10:28: So I will meet again tomorrow and until then good day.

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