US dollar, humanoid robots and the VIX

00:00:00: Besan's treasury coup on Wednesday turned out to be a flop quicker than I thought.

00:00:04: But there is more.

00:00:05: the story, it is that today US dollar is falling even as Treasury yields and crude oil prices rise suggesting that traditional relationships in market are breaking down today as fiscal concerns and confidence in U.S assets deteriorate.

00:00:22: So welcome to Swisscoats.

00:00:24: daily market toll is Friday, the first of August.

00:00:29: Today I will talk about what the markets response to besant means for the broader price dynamics in the longer run and more.

00:00:36: but before i do please keep that opinion on my own.

00:00:51: So investors spent yesterday digesting the U.S.

00:00:53: Treasury's bold announcement on Wednesday to double the amount of bond by back that it is allowed to conduct, to ease their pressure onto longer end-of-the-U.S.-yield curve The move aimed at addressing a ten-to-thirty year segment.

00:01:11: Unsurprisingly, the

00:01:13: U.S.'s

00:01:13: ten-year yield rebounded to recover all post announcement moves and a thirty year yield also retraced half of its post announcement decline.

00:01:21: The idea that Washington today is willing buy back more debt instead adopting his fiscal policy slowing the debt growth in the US while taking control off Federal Reserve monetary policy didn't sound as great as first hours suggested when reality sank.

00:01:36: in Zooming out, the latest news will only reinforce the de-dolarization trade as already in place.

00:01:42: Note that foreign entities like central banks, finance ministries and sovereign wealth funds aggregate holdings of U.S.

00:01:48: treasuries fell to some twelve percent today from roughly around forty per cent during or after the subprime crisis.

00:01:57: The US deteriorating geopolitical relations and loss of confidence due to lack of fiscal discipline were among the biggest reasons for the waning appetite of US dollars and US Treasuries.

00:02:10: And latest news will only reinforce loss of confidence.

00:02:14: With short-lived enthusiasm around the Treasury's announcement on Wednesday, the sellers returned to market and sold risk as U.S.

00:02:22: crude oil kept climbing on Middle East jitters.

00:02:25: There was nothing surprising here really but what's new is that rising oil prices do no longer support the US dollar.

00:02:34: energy prices is being outweighed by the selling pressure that we see in factors that highly displease investors today.

00:02:45: So the dollar falls, it falls as career rises and it falls.

00:02:48: US heels rise too!

00:02:50: This behavior suggests that investors are getting out of their US-dollar holdings and searching for alternatives and the euro emerges an interesting alternative to both reserve and funding purposes.

00:03:01: I wrote a article on that on Swissco's blog back in April.

00:03:05: if you want have better understanding about opportunities but also challenges that Euro faces potentially the US dollar in the longer run.

00:03:14: So I will leave a link below, but back to our beans.

00:03:18: gold on the other hand is another good asset for value protection purposes.

00:03:23: The price of announced just cleared.

00:03:30: So we can say that broadly the wins are changing direction.

00:03:34: The market narrative changed this week from strong earnings, dark pushing US and European indices to record high levels thanks to energy bank an AI led boost in revenues too.

00:03:45: Sovereign yields are rising undesirably, along with the sovereign debt of developed countries and the whole thing is increasing.

00:03:52: The borrowing costs around the globe will end up pressuring earnings expectations on valuations.

00:03:58: And let our narrative is probably here to stay at these as long as oil prices and yields keep climbing!

00:04:05: This week, US retail earnings also pointed to a U.S consumer base that is becoming increasingly price sensitive and selective but still spending enough to avoid signalling recession.

00:04:16: for the Federal Reserve That cooling in spending could eventually help ease demand-driven inflation provided elevated oil prices don't squeeze consumers further.

00:04:25: And it can be positive.

00:04:26: But unfortunately no one can guarantee the latter And NO ONE CAN GUARANTEE THAT THE FEDERAL RESERVE IS LOOKING AT INFLATION ANYMORE.

00:04:33: What's the point right?

00:04:34: Anyway, the US Treasury's unexpected move on Wednesday stole the spotlight this week.

00:04:38: But I don't want to close this week without talking about a big IPO that took place in Shanghai.

00:04:43: It is Unitree's IPO.

00:04:46: The company produces these so-called kung fu robots all over your social media feed.

00:04:52: They dance, they fight each other.

00:04:54: Tied you up and danced together!

00:04:56: They do spectacles and a whole bunch of stuff actually And it costs only around thirteen thousand five hundred US dollars for the G-One humanoid.

00:05:05: So this IPO took place on Wednesday in Shanghai, as I said and unsurprisingly so it drew record demand from investors around eight thousand times oversubscribed valuing the company at more than two hundred times sales.

00:05:19: At the end of first day off trading in Shanghai where the surprise saw four hundred sixty percent shares fell Thursdays or following days before stabilizing Friday.

00:05:30: now we see was very busy.

00:05:31: a smaller scale this IPL look just like space exercise here a few weeks earlier in the US, valuing future dreams more than today's fundamentals for these companies.

00:05:42: So this is why we can see further drawdown and unitree stock price without clear support target.

00:05:48: on the downside I mean at two hundred times sales.

00:05:51: you've got long way to adjust to the downside.

00:05:53: but beyond the euphoria The humanoid robots are seen as next big wave of AI.

00:05:59: Morgan Stanley today expects the human aid market to surpass five trillion US dollars by two thousand fifty with more than one billion human aid robots potentially in use worldwide.

00:06:10: By then, a billion of these digital dues!

00:06:13: Now China is the world's champion for the Human Aid Robots.

00:06:16: For now actually accounted for ninety seven percent Of global humanoid robot shipments In the first half of twenty six while The U.S.

00:06:25: lugs far behind China in terms of Shipments.

00:06:28: Yes Tesla takes A little bit More time Then China to produce These robots.

00:06:32: other Chinese and US companies also are willing to take a piece of this cake because, well it's going be very promising market.

00:06:39: But as an all new and complex technology the timeline for perfection of these products that will show real life purposes at some point in time to allow mass adoption remains pretty unclear.

00:06:51: Companies could achieve reliable real-life use cases and performance!

00:06:57: And attractive returns on investment.

00:07:01: large-scale industrial and commercial deployments will obviously be the winners in this industry.

00:07:06: In a sense, while China's integrated supply chains its capacity to scale up production and of course the Chinese government support will likely play in favor of the Chinese peers against their US competitors.

00:07:18: As such I found Tesla's reaction to Unitree's great first day by spiking more than four percent a little bit curious but round-hills human aid robotics ETF with a ticker that reads Human.

00:07:29: i find it quite brilliant.

00:07:30: well fell sharply since mid August.

00:07:32: now that ETF is actively managed and includes names like NVIDIA Welcome Amazon meta in it.

00:07:37: It changes, but I'm trying to say that doesn't include the robotics companies only which In The Medium Run is certainly an interesting mix for investing into the robotics and vertical chain of Robotics For those who are obviously ready and willing To shoulder volatility due to high valuations across this industry.

00:07:55: speaking Of volatility i will close This week with a VIX index.

00:07:59: the latter has been very low recently while the company's within their sample five hundred printed pretty big interest.

00:08:05: they move especially if we look at the price moves across technology.

00:08:08: So you have been wondering like many, how come?

00:08:11: The latter of moves never showed up in the VIX index.

00:08:14: but one of the reasons why is because these companies moved and quite a disconnected manner from each other on individual factors And that lot of correlation offered an overall stable view on the index level.

00:08:27: thing is That could change If the positive pressure oil prices and yields remain intact or grow and deteriorate can't be set up for companies at the same time and latter could eventually increase correlation among the company's, an increased volatility hands to risk of a further sell-off on index level moving forward.

00:08:47: So with this strong earning story already baked in I believe that it is time for deeper correction next week.

00:08:53: NVIDIA will be closing the earnings dance with its own second quarter earnings announcement, but at this point I doubt that company has potential to move oceans nor reverse quite building selling pressure!

00:09:07: 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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00:09:43: So I will meet you again next week.

00:09:47: And until then, good day trading and have a lovely weekend!