H2 begins with bulls in charge

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

00:00:03: We are Wednesday the first of July.

00:00:05: Marcus entered a second half this year with remarkable momentum despite months of geopolitical tensions as well an energy shock.

00:00:14: AI-driven investment continues fuel equity gains for now while lower oil prices since couple weeks now easing inflation fears.

00:00:23: around Last week's technology fear has also evaporated for now, so it is in this festive environment that market attention is turning toward the US labor market data and chair Kevin Warsh's speech in Centra in Portugal where markets expect continued emphasis on price stability.

00:00:41: On the other hand rising U.S.

00:00:43: sales may challenge equity valuations but robust earnings expectations and abundant liquidity continue to support risk appetite.

00:00:50: So we will talk about.

00:00:54: And as always, please keep in mind that opinions are my own and this is not financial advice.

00:01:06: So the first half

00:01:09: of this hectic year, a more twice severe geopolitical tensions and an energy crisis ended on an exceptionally strong route.

00:01:16: The S&P-Five hundred printed nearly ten percent rise in the first Half of this year to suck six hundred gained more than eight percent and close yesterday having hit a fresh all time high level.

00:01:28: then Japanese Nikkei indexes up by forty per cent since the first trading day off this year also supported by its softer Japanese yen while Taiwan is tight Gain up to sixty percent and the Korean cost be up to a hundred percent thanks To two chip makers.

00:01:45: their memory shipmakers Samsung an SK hynex then spike in oil prices had A very short impact on global investor appetite.

00:01:53: In latest quarter, AI optimism field indices higher.

00:01:58: The chip makers were the biggest winners of the quarter.

00:02:01: The big technologists stagnated On fear that they're massive And increasingly leverage AI spending wouldn't lead to satisfactory return on these investments in a reasonable timeline while the software companies swung.

00:02:15: They swung between the fear that artificial intelligence would kill their business and, on the other hand, on hope that increasingly expensive tokens to replace human beings wouldn't fully replace them at the end of day nor their existing

00:02:31: services.".

00:02:32: So today three-and-a half years after Chatterpity entered our everyday lives I agree that AI increases our productivity significantly.

00:02:40: That it will be deflationary in the medium to long run, but in the short run as an all revolution.

00:02:47: The latter means any important transition that is costing many people their actual jobs unfortunately.

00:02:53: But In the US for example the latest job data has been much less ketatrophic than the layoff headlines suggested perhaps due to job creation For the massive AI built out with also a temporary tailwind from the World Cup at the moment, released yesterday.

00:03:09: The latest data showed that US job openings were slightly higher in April but hiring was also slow Then.

00:03:17: other piece of data also hinted at some improvement in consumer sentiment in the US and also, In terms of expectations thanks to a hypothetical peace deal between the U.S.

00:03:28: And Iran which would keep oil prices lower over coming months.

00:03:32: The good news is that the U?

00:03:33: S Korea Consulate is below the seventy dollar per barrel level again this morning Keeping inflation expectations globally in check.

00:03:42: as the new chair Mr Kevin Warsh Is about to speak Central Bankers Meeting and Sentra in Portugal.

00:03:50: Now note that his arrival to the Fed marks a clear and important restatement of the Fed's policy priorities.

00:03:57: He set price stability as his major priority, remember?

00:04:00: So today he is expected to emphasise the importance of the price stability As US labor data points out.

00:04:07: slowing but not an alarmingly weakening trend in the jobs market And latter The focus on keeping inflation in check will likely continue and could eventually lead to a flattening curve with softer pressure on longer maturity yields in the

00:04:25: U.S.,

00:04:26: as a dietary monetary policy today should have an easing impact on long-term inflation

00:04:32: expectations.".

00:04:34: So how will rising yields on short end of the curve impact U. S. indices is to be seen?

00:04:39: The earnings expectations, on other hand are strong enough for investors to absorb higher yields when inflation expectations are also easing along with easing energy prices.

00:04:50: Anyway, today the ADP report is expected to print one hundred and eighteen thousand new private job additions in the west in June while tomorrow's NFB data could print a similar number with steady wages growth so figures in line with Riesge investors and the markets globally.

00:05:09: that situation in the US, especially in the labor market is steady while inflation again looking better not only on the

00:05:16: U.S.,

00:05:16: but elsewhere as well.

00:05:17: The pullback of oil prices will be reflected next month's inflation numbers around the world.

00:05:23: As the oil shock hasn't been long enough to echo through the rest of economies We already saw a certain pull back.

00:05:29: indeed In Euro areas Preliminary inflation numbers for June early This week and today's aggregate CPI reach for the euro area should confirm a pullback in the Euro areas headline inflation to three percent from Three point two percent printed a month earlier.

00:05:47: So that is welcome development, of course But European policymakers continue to warn that energy crisis may not be over.

00:05:54: an inflation below the two-percent policy target needs to be carefully handled in the coming months.

00:06:01: In concrete, The European Central Bank is still expected.

00:06:21: Therefore, if inflation shows signs of easing in the euro area, the ECB could hardly justify more rates.

00:06:27: pain on underlying economies as such.

00:06:30: The EURUSD upside attempts against a broadly stronger US dollar today remain easily countered by hawkish Federal Reserve expectations and the strength of the U.S economy.

00:06:41: that incontrasts to Euro-area's contraction in the first quarter printed at two percent growth this year.

00:06:50: in the coming months an important shift to early de-dolarization and debasement trade, mind you.

00:06:56: But that being said there were actually many factors other than the Fed that led to that debasment trade since the return of Donald Trump to The White House last year including their rising US debt An unsustainable fiscal policy Trade tensions with major not to say it all trade partners And geopolitical threat that U.S has been posing on historical rival but also on historical allies.

00:07:21: The latter have not changed, the only thing that change is the Federal Reserve's policy outlook.

00:07:26: so I believe that U.S.

00:07:29: dollar in this context will continue to appreciate against most majors on its rising yields and rising rate differential ,but long-term trend of de-dolarization the basement will NOT change!

00:07:42: The letter could lead to a slower than otherwise U. S. dollar appreciation across the board negative impact on US equities as well and also on inflation outside the United States.

00:07:54: But what's clear today is it has become totally unreasonable to turn bearish of financial markets when In fact, we have barely seen any durable pullback in market prices over the past years.

00:08:08: and that's thanks to AI and very strong liquidity support across global financial markets.

00:08:14: And letter is not ready for change at all!

00:08:16: So as liquidity flows in it should go somewhere.

00:08:19: you can call it stock price inflation or put on a back of stronger earnings growth but the market direction remains tilted towards upside.

00:08:33: diversify and benefit from the valuation gaps where it is possible.

00:08:37: There will be corrections down the road, obviously And technology-related volatility today Is high enough to bring in some impressive market moves.

00:08:46: The thin summer trading volumes could also exacerbate the market price action But overall outlook for global financial markets remains bullish.

00:08:56: Our last word on gold, the yellow metal continues to decline below the four thousand dollar per ounce psychological mark.

00:09:04: The bears are supported by a broadly stronger U.S.

00:09:06: seller and rising US sales as well.

00:09:09: A pullback could continue toward the thirty six eighty dollars per ounce level But that level will make Gold interesting for long-term buyers who are looking to better diversify their portfolios.

00:09:21: So this is all for today.

00:09:23: I'm Yipega Skardeshkaya And thank you for joining me all your beautiful and supportive comments.

00:09:29: I hope this episode of Market Talk has been helpful, Follow us on Instagram, on X on LinkedIn but also on WhatsApp, Threads, Telegram and Blue Sky for regular market updates.

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00:09:52: And please don't forget to hit the like button in these videos so that you can enjoy them.

00:09:59: So I will meet again tomorrow and until then good day.

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