From stocks to bonds

00:00:00: Micron rallied on strong earnings yesterday but Optimism was clouded by the news that Apple, which is on other side of this table raised a price with its products significantly to deal with rising memory chip prices.

00:00:13: Warning investors that the memory chips prices cannot go up forever!

00:00:17: On the macroeconomic front, USPC inflation data came in line with expectations helping pull yields lower.

00:00:24: Last risk appetite is souring into the weekend as technology worries way heavier than yield relief.

00:00:30: So, welcome to Swissco's daily market talk.

00:00:34: It is Friday, the twenty-sixth of June and I'm Ipega Skardishkea.

00:00:38: We will be talking about latest news, macroeconomics data technology and obviously try understand where markets are headed next.

00:00:48: but before we do as always please keep in mind that opinions on my own this not financial advice.

00:01:03: So released yesterday, PC inflation numbers in the US confirmed that heating price pressures in the United States.

00:01:11: The monthly figures came in line with analysts' expectations.

00:01:14: we saw an advance of more than four percent for the headline PC number and a rise to three point four per cent year over.

00:01:24: But because the figures were pretty much in line with market expectations, the US yields fell following their data release.

00:01:31: The U S two year yield for example that best captures pooled to nearly four percent mark down from past four point twenty per cent at the beginning of this week.

00:01:43: And note that the pullback came despite a rebound we saw in oil prices yesterday, on news that a ship was attacked in the Strait of Hormuz.

00:01:51: That rebound and oil prices however remain short-lived.

00:01:54: happily as US crude is softer again this morning consolating around seventy dollars per barrel level As investors are somehow overlooking potentially rising geopolitical tensions the Middle East and not pricing in risk of further escalation into the weekend.

00:02:10: So, the latter, a relatively relaxed reaction to the latest Middle East news along with Micron's blockbuster quarterly results could have encouraged a risk rebound across

00:02:21: U.S.,

00:02:21: global financial markets but it didn't.

00:02:24: On its end, Micron materialized a fifteen percent after-hours trading jump and close yesterdays' trading session more than rewarded by a set of low-out quarterly results and very, very strong guidance regarding the coming months thanks to robust AI demand.

00:02:42: But that was pretty much it!

00:02:43: His early optimism across technology stocks remained very short lived indeed, jinxed by Apple which warned about what's happening on the other side of this table because there The significant membership price increases let apple to raise the price of his products.

00:03:02: In reaction, Apple's stock price tanked more than six percent yesterday.

00:03:06: As investors feared that the higher prices would decrease demand for apple products.

00:03:11: hence price increases may not counter the squeeze and profit margins.

00:03:14: other device makers like Dell HP & Lenovo also lost between four to five percent in reaction while Samsung in Korea is down by eight percent at a time.

00:03:25: I'm talking here this morning on where does that massive rise in membership will end up hitting the wall sometime down the line.

00:03:33: As such, the Korean Cosby Index is having one of these days today and eight percent four on index level.

00:03:40: On the index level!

00:03:41: A halter trading session due to a very aggressive sell-off an unbelievably high volatility.

00:03:47: also on the index levels guys over.

00:03:50: in Japan Nikkei is down by more than three percent as well.

00:03:53: on the back off The same souring sentiment regarding technology stocks.

00:03:57: Softbank here which is a proxy of the AI trade is down By thirteen percent at the time.

00:04:02: I'm talking here on Apple news first, and also rumors that OpenAI is looking to delay its upcoming IPO later this year.

00:04:10: To twenty-seven possibly due to shaken confidence in mega AI IPOs.

00:04:15: following SpaceX's post listing struggles via CEO Sam Altman remains unwilling to accept any valuation below the one trillion dollar mark elsewhere.

00:04:25: apple supplies are also feeling the heat today Like a series of falling knives, unfortunately the index actually lost nearly twenty percent since its January peak pushing it to the edge.

00:04:42: It also just slipped today into the medium-term bearish consolidation zone after falling below the major third eight point two percent Fibonacci retracement on January Now, overall the Chinese technology giants have been totally unable to benefit from Iran's war-led technology inflows into other technology names in Japan and Korea or Taiwan for example.

00:05:12: And that for several reasons.

00:05:14: One The strong competition among Chinese technology companies is waiting on their profit margins and investors hate that.

00:05:20: Two The consumer sentiment in China remains very poor limiting appetite for Chinese markets altogether despite strong technologies exports, and three the latest news that Alibaba for example may have copied clothes models.

00:05:33: sure it doesn't help.

00:05:34: Alibama is down by almost five percent in today's trading session in Hong Kong and has lost half of its value since October.

00:05:53: Now lack of appetite for Chinese equities is nothing new.

00:05:57: Chinese companies should convince global investors that they are capable of transforming their technology advance into profit to attract funds, but it's not yet the case even for their EV makers and what's more interesting borrowing costs compared to their Western and Japanese peers.

00:06:19: Alas, nothing to do!

00:06:20: The broader economic weakness in China is heavily waning on investor appetite And that does not look ready for change anytime soon.

00:06:28: Nearby In Japan the heating inflation pressures gave a small boost To the Japanese yen this morning after data was released This morning pulling the dollar Yen slightly lower as well But didn't push the yields higher.

00:06:40: So that's good news.

00:06:41: The ten year JGB yield down this morning at the time I'm talking here, hinting that investors are actually selling their equities and buying bonds in an effort to take some risk off of a table into the weekend.

00:06:56: In this context US & European futures are also in the negative.

00:06:59: This Morning At The Time I am Talking Here With Technology Heavy U.S Indices Leading Losses Moving forward, the flight to Bonds could continue in continuation of this week's Weakened Sentiment in Technology Also Supported By Sustainable decline that we see in oil prices.

00:07:16: The technology complex will probably remain under a heavier pressure than the rest, grappling with its own demons.

00:07:22: while easing global yields should limit losses and non-technology and more cyclical pockets off of market like European indices for example where valuation gap appears wide enough to make these companies interesting for their coming months for global investors.

00:07:42: prices should also back that rotation narrative.

00:07:45: And well to finish this week let's have a quick word on El Nino, Europe is burning this month grappling with very high temperatures for the Europeans of course and the latter climate nominal is expected Push soft commodity prices higher and somehow fuel inflation through foot prices this time.

00:08:04: Well, not that inflation pressures due to higher food prices tend to be more contained than inflationary pressures coming from energy prices!

00:08:12: That's because higher-food prices hit a number of sectors while almost all sectors.

00:08:19: And because the central banks overlooked a highly volatile food and energy prices when they make their monetary policy decisions, El Nino—and even a super El Ninho which looks like one that we are having this year —wouldn't necessarily have material impact on monetary policy decision hence shouldn' t. On the contrary, any economic weakness due to El Nino could further help easing global yields and provide support.

00:08:48: But if the global risk sentiment sewers and technology routes deepens, even the non-technology pockets of the market may not provide a solution to investors who are today willing to reduce their risk exposure especially technologies stocks.

00:09:03: And two Global Financial Markets maybe all together.

00:09:06: so in summary we could be entering a period of flight from Technology to Non-Technological Pockets off the Market And eventually from equities to bonds with an uncertain risk appetite as we enter the hot, hot summer months.

00:09:18: So this is all for it this week.

00:09:20: I'm Ipeko Skardeshvia and thank you for joining me!

00:09:23: Thank This episode of Market Talk has been helpful and it's been insightful to you, so please do not hesitate to leave your comments, reactions or questions below as usual.

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00:09:57: So I will meet again next week!

00:10:00: And until then, good day

00:10:18: trading.