Time to go back to gold?

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

00:00:03: It's Thursday the thirteenth of August.

00:00:05: yesterday soft US inflation data is giving investors another dose of relief lifting equities and bonds across the globe as expectations for an imminent Federal Reserve rate hike are easing today.

00:00:18: AI optimism on the other hand adds additional fuel to this engine with core view and nibbius two neocloud providers surging on explosive revenue growth despite widening losses.

00:00:31: But the relief could prove short-lived as inflation remains above the Federal Reserve's inflation target, oil prices are climbing again amid persistent Middle East tensions AI spending is increasingly relying on leveraged balance sheets and while borrowing costs in the US and elsewhere in the world are rising structurally Hence, markets may be celebrating softer CPI today but inflation debt excessively optimistic AI outlook and geopolitical risks have not gone away.

00:01:01: 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 This is not financial advice but probably temporary relief thanks to the subject US data release yesterday.

00:01:25: So, yesterday's U.S.

00:01:26: inflation data came in exactly as expected by analysts.

00:01:31: both headline and core figures rose slightly In the month of July on monthly terms pulling the yearly numbers slightly lower.

00:01:39: The latter comes on top off a broadly soft-to-US jobs data and wages data released last Friday As well remember.

00:01:46: So yes, the data is ideal but price pressures remain well below the Fed's Supercent Inflation target still calling for a rate hike from the Fed this year though the softish looking numbers both from jobs and CPI front by time.

00:02:01: Wait, maybe a little bit longer before it hikes the interest rates.

00:02:04: And the idea of a delayed fed-rate hike is giving a fresh boost to equity markets across the globe along with strong positive reaction.

00:02:16: In this context, NVIDIA BACOVI for example jumped twenty percent yesterday on a one hundred and twelve-percent revenue growth compared to the same time last year.

00:02:25: The company also raises its revenue outlook convincing investors that it's widening loss to past six hundred and twenty million US dollars which is more than double last years.

00:02:34: two hundred ninety million us dollars lost was worth the revenue that will make thanks exploding AI demand.

00:02:42: Same for Nibius who saw his own surprise so thirty four per and yesterday after reporting his own results suggesting that the FOMO, The fear of missing out on the success story of these new cloud companies is not.

00:02:55: fully over just yet.

00:02:57: Also note that the fact these companies had sizable short positions against them into earnings announcements also emphasises the size of the positive moves we saw yesterday as macroeconomic setup was softening fed rate expectations on sub-data, helping to lift their valuations by making a discounted value revenues higher today than with high requirement costs obviously.

00:03:26: So overall, and despite an early scare of seeing big technology companies free cash flow levels plunged to low.

00:03:32: And sometimes even two negative territories in some cases during this earnings season while the cloud providers both traditional established ones like Microsoft and Amazon are the newcomers like Nibius and Kobe who come out off these earning seasons with a smile To say at least.

00:03:50: among the big players Amazon and Microsoft also comes as strongest links from this earnings season thanks to the strong cloud performance in these companies, Microsoft especially which was battered by investors for months.

00:04:03: For being one a software company and two A big AI spender was finally praised for not boosting its spending plans further while Meta with his nascent plan to build a cloud unit so he'll land out all that AI Spending capacity it might be using for itself remains their weakest link still.

00:04:24: chip makers on the other hand are coughing back to life these days, following a harsh earning season.

00:04:30: To say the least we're strong, strong earnings from these chip companies couldn't prevent a due correction but if you look at the Cosby index... We start actually seeing rebound in this Cosby Index which is heavy and two memory chipmakers accelerate these days as investors are back too building long positions convinced that they cheap-cheap valuations for SK Heinecks & Samsung are worth taking the risk as the speculative positions here have been mostly wiped out over this summer.

00:05:01: And finally, as per the circular deal skier.

00:05:04: The latest being triggered by NVIDIA's latest five hundred billion US dollar funding support from big Wall Street lenders to finance AI data center projects for its customers while the latter helps somehow ease a company CDS levels without however eliminating risk that if something goes wrong among DDA's expensive chips and expensive racks.

00:05:33: Well, things would look ugly for its own revenue outlook too by the last four.

00:05:37: now The good news is that these circular AI deals seem to be paying off.

00:05:42: in a case of Microsoft For example it reportedly up to seventy percent office AI Revenue has been generated by open AI While the Chinese rival Deepseek warned earlier this month, remember that it would raise prices of its products significantly given some relief to the worries that price competition from China will destroy US companies profit margins and with somehow eco negatively across AI bodies.

00:06:12: The bad news is that the whole economy relies on the shoulders Two US startups, OpenAI and Anthropik who have multi-billion dollars worth of deals with AI enablers such as data centers cloud providers and chip makers.

00:06:28: And finally, as per the Chinese rivals, appetite in Hunseng peaked in August on fear that AI spending in China has also started worrying investors, the Chinese technology companies will likely continue to see periods of boost and retreat on their technology progress.

00:06:47: But they must make sure to keep their competitive advantage, the competitive price gap wide enough to challenge globally popular U S rivals such as open AI and Anthropic.

00:06:59: Zooming out market mood has sweetened after the benign US inflation data pool yields lower yesterday.

00:07:04: As I said this MP five hundred each out a small point.

00:07:07: twenty six gain, technology having now has a hundred gained point seventy-four percent as the US two year yield is below four point.

00:07:15: twenty percent after data.

00:07:17: Activity on funds futures now assesses around sixty per cent chance for September rate hold from Federal Reserve as probability of an October rate hike.

00:07:27: five percent.

00:07:31: That is not a lot, it's almost a coin flip!

00:07:34: So the latter echoes positively across Asian bond markets as well this morning at the time I'm talking here and US & European futures are looking in the green but the softer Fed expectations on the other hand have been so far clouded by rising oil prices and have not translated into a softer U.S dollar across-the board In the sense that your dollar sees resistance near its two month high levels which also So coincides with the year-to-date bearish trending channel top, while the dollar yen is still testing.

00:08:06: US and Japanese officials knows it touched below their critical one hundred and sixty level keeping investors on alert regarding another potential U.S.-Japan intervention.

00:08:17: now coming back to the u.s inflation data as discussed yesterday Yesterday's soft inflation report from The West doesn't mean that the price dynamics are only sustainably easing path.

00:08:27: His energy prices, which are mainly responsible for this year's heat up and inflation numbers.

00:08:31: Are rising again with no easy resolution in the strait of hormones between US and Iran.

00:08:38: On the contrary The latest news today suggests that Iran is shifting toward a more offensive stance making it look complicated by day.

00:08:49: As a reaction, US crude console lays near the eighty-three dollar per barrel level this morning and that's around twenty four percent higher than July.

00:08:58: Diff with potential to rise further obviously as U.S ten year bond auction yesterday saw highest yields since two thousand seven!

00:09:07: The push being driven by real yields basically which are adjusted for inflation.

00:09:12: hinting even if we filtered out the nascent and maybe temporary rise in inflation due the rising energy prices, while US tech is costing structurally higher today.

00:09:24: Blamed exploding debt and deteriorating confidence in U.S institutions including both the US Treasury and Fed.

00:09:31: As such there's reason to believe that gold appetite around the world will return further!

00:09:37: Moves in US dollar and US sales could interfere with intraday moves we see potentially pulling gold prices lower if they rise for example but longer term outlook remains comfortably positive on the ongoing de-dolarization efforts globally.

00:09:54: So this is all for today, I'm Ipek Oskar Deshkaya and thank you for joining me!

00:09:58: And Thank You For All Your Beautiful And Supportive

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00:10:31: So I will meet again tomorrow and until then good day

00:10:37: trading.

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