Oil contained despite weekend’s Mid-East tensions

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

00:00:03: It's Monday, June.

00:00:05: Mark has kicked off the new week on a surprisingly calm note.

00:00:09: despite another round of U.S.-Iran attacks over the weekend Oil prices remain contained.

00:00:14: this morning as investor attention is now turning to macroeconomic drivers with the US jobs report and the new Fed Chair Kevin Warsh's speech in Cintra both having potential to reinforce expectations for it hawkish federal reserve in the coming months and as a result, continued gradual US dollar strength.

00:00:37: So we will talk about all that and more but before we do... And As always please keep in mind that opinions are my own!

00:00:46: This is not financial advice.

00:00:56: Given The Ugly Weekend news regarding U.S & Iran's mutual attacks on each other in the Middle East I was expecting this week to start with bad shape.

00:01:05: But no Not at all.

00:01:07: The two countries announced that they would stop bombing each other, that they will start fighting and the sun is shining bright again this morning.

00:01:16: Although the traffic in the straight-off homes has been impacted since attacks started last week, the impact on oil prices remained pretty contained.

00:01:24: And thats what matters for investors Because some key oil markets have even turned oversupplied Thanks to the release of strategic weavers and oil tankers sneaking out moderately to fresh escalation of the Middle East tensions today than a few weeks ago.

00:01:57: this morning.

00:02:10: Bonn yields on the other hand are slightly higher, while the Japanese ten-year yield is pushing toward a two point sixty five percent level.

00:02:19: This morning as stronger than expected retail sales data in Japan fueled the hawkish Bank of Japan expectations.

00:02:27: Actually strong data is the result of fiscal stimulus measures from the Japanese government that the bank must balance out to tame inflationary pressures.

00:02:36: Alas, the Japanese yen traders are not very much convinced that the Bank of Japan will normalize this policy fast enough to relieve the pressure on the Japanese Yen.

00:02:46: So a dollar yen is gently pushing past the one hundred and sixty-one eighty level This morning.

00:02:52: if it's not rising faster It is because the yens shores are expecting The japanese authorities to step in at some point In time to tame the selling pressure.

00:03:01: But japanese authorities have been more patient than before.

00:03:06: So let's see if and when they're going to intervene.

00:03:09: But anyway, appetite for Asian equities is quite tempered this morning.

00:03:13: The technology heavy indices are being sold off generally because in the UK For example In Japan it's down by more than one percent at a time.

00:03:21: I'm talking here.

00:03:22: Soft banks took another dive today around six percent down At that time.

00:03:26: i am talking Here on rising questions about AI valuations and huge spending And quite a lower appetite since last week.

00:03:35: The cost beyond other hand was then when I sat down to my desk This morning, with turn-positive on news that the Korean chip makers like Samsung and SK Heinecks will be building two more fabs in South Korea to meet rising membership demand.

00:03:49: With the Korean authorities also insisting on needs to boost energy through renewables to feed the energy hungry facilities.

00:03:57: Last week hot trade especially in the membership makers took a hit remember and that despite blockbuster results from micron The latter closed more than six percent lower on Friday's trading session, while other hot-hot names such as Sandisk and Western digital printed double digit losses on Friday's trading sessions.

00:04:16: And broadly according to the latest data hedge funds dump their technology holdings at the fastest pace on record.

00:04:23: The rotation out of technology continues and stress around technologies sucks expected too well be in place this week but earning strength will also likely continue throw a floor under any periodic sell-off that we might see in technology stocks and somehow continue to bring the buyers back into market as one.

00:04:44: The AI investments grow at such a parabolic pace today with big technologies expected to spend between eight hundred billion US dollars, two trillion US dollars on AI infrastructure just this year.

00:04:55: That's going into the pockets of AI enablers And the latter boosting corporate profits In a way that the U S hasn't seen so far.

00:05:03: because corporate profit profits in the US are now making up more than twelve percent of U.S.

00:05:08: GDP and analysts expect S&P five hundred earnings to grow by more then twenty one percent.

00:05:17: Twenty-one percent.

00:05:18: All thanks to AI investments, but here's the problem.

00:05:22: The huge investments are also drawing the big technologies free cash flow in hand and oblige them To take on more debt to make these investments And put their valuations under pressure In a period where the rising yields Are all so not playing in favor.

00:05:38: So in summary the big technology they're early winners of the AR rally are stagnating today.

00:05:43: They are under pressure while the AI enablers is still interesting as the mass huge investments and chip makers have had a strong pricing power so far to print stellar results.

00:05:54: But, as their prices start squeezing profits down the line… And here I am referring to Apple's announcement last week won't increase at the current speed forever.

00:06:16: As a result, the hottest AR trade will probably continue to change hands like potatoes as investors are constantly looking for the next big beneficiaries of the AI trade and some investors think that infinite.

00:06:30: At The End Of Today it's not technology companies but economy is whole that will benefit from increased productivity gains thanks AI, but on the other hand given the valuations and importance of technology in today's market prices rotation from technology to non-technology will also encourage a downside correction.

00:06:51: So do we have all the corrections in our market continue this week?

00:06:54: Possibly!

00:06:54: The major catalyzes of the week however will likely come from the macroeconomic front this on Friday.

00:07:14: So the US economy is expected to have around one hundred and twenty thousand new non-farm jobs in a month of June with steady wages growth, round point three percent on a monthly basis.

00:07:28: those are expectations The latter.

00:07:30: so the wages growth part.

00:07:31: it's more important for investors today than the headline NFB data as the Fed's focus has shifted to inflation.

00:07:37: remember after Kevin wars first FIMC announcement.

00:07:42: surprise on the NFP front, we will be mostly watching the wages growth.

00:07:46: Plus, Kevin Warsh will be speaking at a Central Banker meeting in Sinchwa this week.

00:07:52: His speech will also very closely followed by central bank watchers around the world.

00:07:57: every sentence!

00:07:58: Every word and every mimic will serve to predict where the Fed is headed next.

00:08:02: So far, The Fed's hawkish shift has given certain boosts against most majors And that renewed appetite for the US dollar on the back of more hawk-ish fed could continue if the Federal Reserve remains focused.

00:08:27: But the Fed expectations have gone far enough to price in a nearly Eurodollar tested but held ground above a critical Fibonacci retracement level last week, which was the major.

00:09:02: I expect the pair to hold ground near that level unless we see a major surprise again in their economic data, but with limited upside potential for the euro as The latter.

00:09:19: US dollar appreciation and the positive pressure that we see on U.S.

00:09:23: yields should also continue to pressure precious metal prices lower as higher yields increase the opportunity cost of holding non-interest bearing gold, making these metals less interesting for investors in a period of rising yields.

00:09:39: Here, the four thousand dollars per ounce support for Gold will be especially closely watched by investors around.

00:09:48: speculative phase is over just yet?

00:09:51: Or, Is there more air to come out of this balloon and make gold safe again.

00:09:56: So this is all for today.

00:09:58: I'm Ipeko Skardishkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

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00:10:36: So I will meet again tomorrow and until then good day trading!

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