Damned if you spend, damned if you don’t

00:00:00: The technology stocks attempt to rebound this week but rising oil prices and surging bond yields as a result of it are once again putting global markets under pressure, as Middle East tensions reignite inflation fears around the world and cloud outlook for central banks.

00:00:16: Investors are shunning their long-dated bonds keeping long term borrowing costs elevated particularly in the AI.

00:00:26: Meanwhile, big technology phases and increasingly difficult dilemma Keep spending aggressively to stay ahead of China's rapidly advancing AI industry, or slow investment and risk losing the competitive edge.

00:00:39: So welcome to Swiss Coats!

00:00:41: Daily Market Talk is Tuesday, July twenty-first.

00:00:45: today before The Big Technology kicks off the Earning Season or say the Spending season I'm Ipeco Skardyshkoja And i will try put together the latest pieces in order find a path into this jungle news & events.

00:00:59: But before I do and as always, please keep in mind that opinions are my own.

00:01:14: So the US and European markets kicked off this week on a cautious note as yields kept rising along with energy prices, all mounting tensions in the Middle East that threaten all over again availability of oil and gas into coming weeks or months.

00:01:29: That to the extent that Goldman Sachs is again calling the crude at one hundred twenty dollars per barrel level!

00:01:35: Give me a break... So yes, the U.S.

00:01:37: created near-eighty three dollars per barrel mark yesterday and Brent's spike passed a ninety dollar per barrel psychological level on news that how these are considering blockade in the Red Sea to prevent Saudi Arabia from exporting its oil the Yanbu port there.

00:01:53: Remember Saudis had diverted their oil exports from the state of Hormuz to the Red Sea and has been exporting from the Yanbubu Port there, and exports there reach four million barrels per day according to Bloomberg somehow cushioning the nearest oil traffic in the state-of-Hormuz.

00:02:10: now these flows are under threat again but rumor has it a senior Iranian official said mediators proposed ten days he's fired to revive Iran an US interim deal.

00:02:20: so Oil is slightly lower this morning, but the risks remain obviously tilted to the upside or maybe not to one hundred twenty dollar pro-barrel level though But in the effects US dollars being supported by renewed upward pressure and oil prices with appetite Is perhaps weakened by their renewed tariff chaos as well between the U.S.. And The countries that are pissing them off.

00:02:42: yes I'm looking at you Canada You didn't do anything?

00:02:45: But this is how it goes better overall the hawkish shift and central bank expectations around the world favors.

00:02:52: the U.S.

00:02:52: dollar because u.s.

00:02:53: dollar has better growth prospects than say, Japanese and European economies hence their currency.

00:02:59: so dollar yen in this context moves little near to one hundred sixty-two on a half level while the euro dollars is now consolidating losses at around mid range of year today downtrending channel ahead of Thursday's european central bank decision A decision that isn't expected bring any change to the european Central Bank And across the channel, while The British Pound is making up and downs these days on political news as a new PM Andy Burnham is now putting together his cabinet.

00:03:32: He's trying to convince the Bristad that he could turn around fortunes while also trying on the other hand to keep investors calm that he would do so within budget constraints.

00:03:46: Guilty investors look sceptical though, The ten-year guilt yield is again above a five percent psychological mark but it reflects rising energy prices of course.

00:03:56: as such A benchmark for European Ten Year Yield closed past three point sixteen percent level yesterday.

00:04:02: That's the highest levels since May twentieth and at near peak levels.

00:04:08: Iranian conflict so far, while the US two-year yield that best captures the Federal Reserve's rate expectations spiked to a four point twenty three percent again and is settling near their four point Twenty percent level this morning.

00:04:22: Now what's interesting Is that smart money doesn't want adventure in government bonds any more due To the highly uncertain monetary policy path.

00:04:31: Of course, it's not the policy path as uncertain per se.

00:04:35: It is the news that drive the monetary policy.

00:04:38: this situation in the Middle East?

00:04:40: Is this absurd diplomacy that the US has around the world?

00:04:44: This childish thought?

00:04:46: attacks on tactics threats and inability to make ends meet for the U S an Iran as the u s wants old self and Iran will naturally not seize much after four months in hell.

00:04:59: As such, many investors around the world are now reducing the duration of their bond holdings, their bond portfolios, duration being a measure of bonds sensitivity to interest rate changes And they're now favoring short-term bonds over longer maturity bonds To avoid making the wrong call and locking themselves into a multi year position.

00:05:24: It keeps upward pressure on long-term borrowing costs, raises discount rates applied to financial assets makes it more expensive for governments and companies to finance themselves.

00:05:35: And limits the amount of capital flowing into the riskier assets until until there is greater clarity on inflation and central bank policies.

00:05:48: The early euphoria surrounding the big technologies, barn sales has faded recently.

00:06:13: Remember Amazon's latest barn sale saw a notably weaker demand than the previous ones?

00:06:19: We see a tentative rebound across global chip makers since yesterday that were remembered last Friday by the news that Chinese AI started up moonshot AI at-performed, anthropic and open AIs most performant models on several areas like coding.

00:06:34: When I asked my conductor ETF traded up yesterday, though it's spend the day pulling back to close a date only point forty one percent higher.

00:06:44: That's quite is small moon module for an ETF that got us used to three and five percent up-and-downs on daily basis intraday moves while The Korean Cosby is in excellent shape today with four percent rebound at the time i'm talking here.

00:06:58: yet obviously the volatility remains too high to call a full person rebounds potentially sustainable.

00:07:04: On the contrary, high volatility is a symptom of a bearish market and the Korean Cosby Index today is struggling near critical Fibonacci support.

00:07:15: The major thirty eight point two percent retracement that should distinguish past year's impressive rise from a medium term bearish consolation That looks so much needed right now after a stellar three hundred percent in plus rally since April.

00:07:30: twenty thousand twenty five Three hundred percent really on an index spaces.

00:07:34: That's huge and I actually just call for correction.

00:07:37: over in China, the Hansang Index Console days gains this morning also supported by state back funds that are stepping into stabilize their Chinese markets at the local chip makers in China our leading games.

00:07:49: today on news at Jipu AI.

00:07:51: so This is one of China's Leading Frontier AI companies while that company built a data center using only Local Chinese chips.

00:08:01: now no one knows if these news are correct or they're misleading but that actually does bring in the question of will the news further rattle the non-Chinese chip makers?

00:08:10: Well, The answer is not.

00:08:11: if the rising Chinese competition justifies a pace of AI spending in the West.

00:08:15: So speaking off that spending Alphabet is due to announce an update to its spanning plans tomorrow after closing bell in US.

00:08:23: Yes it will accessorially annouce second quarter earnings as well along with the Spending Plans.

00:08:28: I'm trying put the emphasis here on spending because chances are that.

00:08:36: Remember, investors don't want the big technology to further increase their spending.

00:08:40: If they return on investment doesn't follow it doesn't show up.

00:08:44: but very few asked a question of what happens if the Big Technology scales down spending?

00:08:50: I actually believe that at this point in time from market perspective It is perhaps better to hear further spending for the sake off entire stock market than possibly reasonable decision to slowdown.

00:09:02: Damned if you spend, damned if you don't.

00:09:04: So we will see how the market reacts to what Alphabet says.

00:09:08: but this is all for today.

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

00:09:32: Threads, Telegram and Blue Sky for regular market updates.

00:09:35: Subscribe to our YouTube channel for daily market commands!

00:09:39: And please don't forget to hit the like button on these videos so you can let us know that YOU enjoy them!

00:09:46: So I will meet again tomorrow….

00:09:48: Until then, good day

00:09:51: trading!

00:09:58: SwissQuote assumes no responsibility for accuracy or losses from its use.

00:10:02: Products and services are offered only where legally

00:10:04: permitted.".