Odd peace optimism

00:00:00: Hi and welcome to SwissCodes, daily market talk.

00:00:03: It's Monday the second of June, markets begin their new week in an oddly optimistic mood despite a confusing twist over weekend in U.S.-Iran negotiations.

00:00:14: The Strait of Hormuz is stuck in open-close mode.

00:00:19: yet interestingly investors around the world somehow continue.

00:00:23: focus on the possibility is not going well.

00:00:31: So we will talk about that and what else will matter this week in terms of economic data, corporate earnings.

00:00:36: but before So the week starts and is surprisingly positive mood provided.

00:00:56: The uncertainty in US-Iran peace negotiations, which Friday got postponed remember likely due to Israel's renewed attack on Lebanon.

00:01:05: Iran announced Saturday that it would close a straight of home again but then highly ranked officials from U.S & Iran still met in Swissberg and Stockton kick off their sixty day negotiation period.

00:01:16: on Sunday they said that talks went well so far US President.

00:01:20: Meanwhile, Twitter threads again.

00:01:22: And here we are this Monday morning!

00:01:24: U.S.

00:01:24: crude kicked off the week with a small jump past the seven to eight dollar per barrel level but rapidly retraced earlier gains.

00:01:32: The u.s and Japanese yields jumped however But the latter didn't necessarily prevent the decay for example from advancing to a fresh all-time high level on one a broad-based technology appetite that also pushed the Korean Cosby and Tyus index higher than two, softer Japanese yen which make the Japanese companies lot cheaper for foreign investors.

00:01:54: Indeed The Dollar Yen spiked to nearly one hundred sixty one point seventy level this morning.

00:01:59: We are now clearly moving above the pain threshold for Japanese officials.

00:02:04: Finance Minister Katayama actually did say that authorities should be ready to take action against excessive currency moves at any time from now on, but we haven't seen action just yet.

00:02:18: The CFTC data on the other hand confirms that the market is very, very crowded with short speculative yen positions today.

00:02:25: meaning if the Japanese intervene we will see a sharp move downwards in the dollar yen which will clear part of the short yen position but won't change the selling pressure on the yen in mid-term run.

00:02:38: I mean even last week's rate hike from Bank of Japan and expectation for another rate hike this year was not enough to bring the Yen Bulls back to market last week.

00:02:49: On the yields front, the ten and thirty year JGB yields are sharply up this morning on realisation that U.S.-Iran peace talks may not lead a concrete agreement with Israel totally out of control today.

00:03:03: but interestingly the multi-decade high yields in Japan don't necessarily attract big Japanese institutions like insurers and pension funds too as they seem Japan's rate normalization will not be fast enough to contain inflation in japan which, in return ,will continue to weigh on the real yields.

00:03:26: Real returns from these government investments making Japanese government bonds July but they turn sellers again in May.

00:03:46: The latter somehow tempers the reverse carry worries across the globe, But doesn't necessarily solve other problems such as unreasonable valuations especially for some technology pockets off-the market and inflating bubble worries.

00:04:00: Speaking of that, Nasdaq hundred closed last Thursday to a half percent higher recovering most early week losses on technologies selloff And the weak started with strong technology appetite As I said earlier, but NASDAQ futures are slightly in the negative at this time.

00:04:18: Let's see if market turns green and the coming hours which is a concrete possibility given the optimism that BC in technology stocks in Asia this morning?

00:04:26: Because LG Electronics for example in Korea gained more than ten percent on news ad some of their executives will visit Nvidia's quarters today to talk about potential cooperation between two companies physical AI and robotics, which is MVJ's new AI ambitions mind you.

00:04:44: But while the world-sorting Korean technology sucks his mind blowing right now LG Electronics for example rose more than two hundred forty percent in May just end of month of may but lost half its value in past three weeks.

00:04:58: Physical AI is sure a promising area And Asians are uncontestably ahead off game when it comes to robots whether we're talking about Koreans Japanese or Chinese.

00:05:08: But AI promise come with wild price swings that investors should shoulder to eventually claim potential long-term gains in the sector.

00:05:17: And that, for me is a major challenge for investors today.

00:05:20: Now this week, Micron which has become one of the hottest AI stocks after year is heading to the earnings confessional with expectations running sky high obviously.

00:05:30: Analysts expect the last quarter revenue thanks to strong demand for high-bandwidth memory, using AI service and the actual boom cycle that we are in.

00:05:50: And some investors consider will last forever!

00:05:54: Now latest technology will send micro and roller coaster rides since end of May with big daily moves and sometimes you're talking about double digit percentage of price move up & down within just one session like eleven percent up thirteen percent down.

00:06:10: but the patients paid off so far for micro-investors as micro and clause last week at a fresh all time high level.

00:06:17: One share now costs more than eleven hundred thirty dollars versus around one hundred twenty five dollars per share, it's around the same time!

00:06:26: Last year that is tenfold increase.

00:06:28: yes ladies and gentlemen on idea in thinking that current boom cycle in memory chips will last forever.

00:06:35: But It may not As new technologies more efficient technologies could slow down demand for memories and force investors to scale back future revenue expectations.

00:06:46: So the real test will not be the quarterly results from migrant themselves, but whether migrant can convince investors that AI memory boom still has room.

00:07:00: I'm telling you, at the current valuation anything less than a blockbuster forecast will disappoint in market that has become used to perfection and it simply was ahead of itself.

00:07:10: On a data from last week of June we'll be marked by US final first quarter GDP and May inflation numbers with Federal Reserve's favourite Goja of Inflation, PC Data due Thursday Last week.

00:07:23: remember the new Fed Chair, Kevin Warsh chose put emphasis on price stability.

00:07:29: quarterly dot plot also show that the federal reserve members collect a return.

00:07:34: more hawkish on their monetary policy outlook for this year, with many, remember favoring at least one interest rate hike THIS YEAR and some seeing an increase need for TWO interest rates in the US in the second half of this year.

00:07:48: Therefore stronger than expected inflation numbers could further back the hawk-ish Fed expectations which the U.S.

00:07:55: stills AND the U S dollar higher & potentially weigh on equity appetite.

00:07:59: In the FX.

00:08:00: The U?

00:08:01: S Dollar Index rose to highs.

00:08:02: that was in than a year following last week's hawkish Federal Reserve announcement, but the hawk-ish Fed expectations have already been broadly priced in at this point of time.

00:08:13: So moving forward, the stronger U.S.

00:08:15: dollar will keep inflation worries outside the US anchor despite falling oil prices if oil prices continue to fall and latter could throw a floor under the euro dollar for example within the one thirteen fifteen two one fourteen range due tier.

00:08:30: possibly more hawkish ECB expectations not on rising oil prices this time but rather are for cable, struggling near a critical Fibonacci support today.

00:08:42: A further downside becomes increasingly plausible with rising political uncertainty in the UK and unclear spending plans.

00:08:53: Remember, the UK's borrowing costs are very high right now for promising further spending to the Brits.

00:09:00: But a political campaign without that promise of more spending and helpful population would hardly be successful.

00:09:06: so time will tell how things evolve in the UK.

00:09:10: but the UK downward spiral is hard to reverse without its significant improvement on growth & productivity and I don't see that happen overnight.

00:09:20: If you do, please shout out to me in the comments below!

00:09:23: So this is all for this Monday...I'm Ipek Oskar Deshkaya And thank you for joining me and Thank You For All Your Beautiful And Supportive

00:09:31: Comments!!

00:09:31: I hope.. This episode of Market Talk has been helpful & it's been insightful To you so Please Do not hesitate to leave your comments, reactions & questions below.

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00:10:02: So I will meet again tomorrow….

00:10:05: Until then, good day trading!

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